27th GST Council Meeting

Held on 4th May 2018 finally approved the filing of new return based on the recommendations of the Group of Ministers on IT.

👉 Talking Points: 

* One monthly return* Unidirectional flow of bills * Simpler returns design
* No automatic reversal of ITC
* Online process for recovery and reversal
* Supplier side control
* Three stage transition
*GST Rates- 

• Reduction of GST rates for digital transactions
• Sugar Cess over and above 5% GST and reduction in GST rates of ethanol

* Proposal for the govt to have majority stake in GST Network, 

👉 The key feature of new return is as under:

1. Periodicity: Under the new regime, a Single Return will be filed by every taxpayer, except few like composition dealer, on monthly basis unlike multiple returns filing under the existing system. 

• Due date of return filing will depend upon turnover. 
• A dealer with nil transaction may file a quarterly return.

2. Invoices- Under the new system, uploading of invoices will be unidirectional by the seller. Seller may upload such invoice at any time during the month and such invoice will be available to the buyer on a real-time basis. Buyer will not be required to upload purchase invoices separately. 

• HSN of 4 digits or more will be required on all B2B invoices to achieve uniformity.

3. Simplified return: Based on uploaded sales details, the system will automatically compute GST liability. 

• The system will automatically calculate Input tax credit based on sales invoice uploaded by the supplier.

4. Input Credit- In case of default in the payment of GST by the supplier, credit will not be denied to the buyer. Recovery of such tax will be made from supplier primarily. However, in certain cases like non-availability of supplier or discontinuation of business by the supplier, credit may be disallowed to a buyer.

• To control misuse of Input Tax credit, person defaulted in payment of GST will not be allowed to upload sales invoice and accordingly, no credit will be available to the buyer on purchases made from such supplier. Similar safeguards would be built with regard to newly registered dealers also.

5. Transition to new GST return will be in 3 stages:

Stage-1: will be the present system of filing of GSTR-1 and GSTR 3B. GSTR-2 and GSTR-3 will continue to suspend. This stage will continue for not more than 6 months.

Stage-2: In new return, invoice wise sales uploading facility will be available, however, input tax credit will be available on a self-declaration basis. This phase will continue for next 6 months.

Stage-3: In this stage, credit will be automatically computed by the system based on invoices uploaded by the supplier and window for provisional credit will close.

• To keep return form simple, reduced information/content will be required in return.

6. Decided to make Goods and service tax network-  Special Purpose vehicle (GSTN-SPV) a government body by increasing its stake in it from 49% to 100%. Presently, 49% equity in GSTN is held by the government (24.5% each by the state government and center government) and rest 51% equity is held by non-government institutions.

7. Digital Transactions- Further to promote digital transaction, the GST Council has discussed a proposal of a concession of 2% in GST rate [if GST rate is 3% or more] on B2C supplies, if payment is made for such supply through cheque or digital mode, subject to a ceiling of Rs. 100 per transaction. However, it is yet to be approved.

8. Sugar- Keeping in view the record production of sugar in the current sugar season, and consequent depressed sugar prices and build-up of sugarcane arrears, the GST Council discussed the issue of imposition of sugar cess over and above 5% GST and reduction in GST rate on ethanol. However, it is yet to be approved.

9. other-

• Include Real Estate/transfer of property into the GST regime
• Amendment of the ITC provision in the GST to enable any business to take credit on any business-related expenses (employee transport etc.)
• Exemptions for payments made by employees for the services received from the employers (eg: canteen services)