GST Council Gives Taxpayers Two Months to File Returns

The council relaxed the timeline to file the first set of GST returns to allow smooth rollout of the regime.

4 min read

Union Finance Minister Arun Jaitley. (Photo: PTI)

In order to allow smooth rollout of the Goods and Services Tax (GST) regime, the Council on Sunday relaxed the timeline to file the first set of GST returns. Taxpayers will now submit a simple return form containing a summary of inward and outward supplies by the 20th of the succeeding month. The council also relaxed the invoice-wise detailed filing of GST Returns-1 for the month of July to September 1-5 and for the month of August to September 15-20.

Filers will not be subject to late fees or penalty during this interim period, the Finance Ministry said in a media statement.

Industry had raised concerns over filing of returns under GST due to the lack of readiness of the IT infrastructure – the GST Network (GSTN).

Screenshot from Finanace Ministry press statement.
Screenshot from Finanace Ministry press statement.

Sumit Lunker, indirect tax partner at PwC told BloomergQuint,

Allowing summary returns for the first 2 months is a very big relief as most countrymen are still preparing for transition to GST and have not been able to align their I-T systems.

Filing summary returns and then giving time to file transaction-wise returns till September will help small businesses to smoothly move to the new system, he added

Jigar Doshi, tax partner at SKP Group – a tax consulting firm – agreed that this move will offer relief to small taxpayers. But he pointed out that since the implementation date continues to be 1 July 2017, “the requirement to align of ERP systems, transitional compliances and preparation for legacy law compliances remain as is”.

He also pointed out that the delayed filing will also mean delayed reconciliation for the purpose of input credits.

Reconciliation will not be possible to start with as the GST return Form 3B for first two months is only in summary. However, reconciliation will happen for the said months on the basis of the returns to be filed in September. Net net, reconciliation for July/August 2017 will happen, but in September 2017.
Jigar Doshi, Partner, Indirect Tax, SKP Group

Anti-Profiteering Body

The 17th GST Council meeting also cleared rules relating to anti-profiteering, advance ruling, appeals and revision, assessment and audit and funds settlement, Finance Minister Arun Jaitley told reporters in a media briefing on Sunday.

A national committee will be set up for anti-profiteering, consisting of 4-5 members, which will look at complaints registered and decide which of those need to be taken by further, Chairman of the CBEC, Vanaja Sarna told BloombergQuint. The composition of the body has not yet been finalised, she added.

E-Way Bill: More Deliberations Ahead

The Council discussed rules for electronic way bills. Jaitley said there will be further deliberations on this issue. Till a final decision is taken, states will continue with existing systems, Jaitley said.

There were two opinions relating to e-way bills in the council. There will be further deliberations on e-way rules. Till then, an alternate rule will operate which will authorise the existing system of states to continue
Arun Jaitley, Finance Minister 

“The indication from the finance minister that states may continue with their own current system on e-way bills brings ambiguity around the same and may dilute the one nation one tax moto of GST,” Abhishek Jain, tax partner at EY India said in an emailed statement.

Tax on Hotel Tariffs Revised

The big revision came in rates on hotel tariffs. For hotels with daily tariffs above Rs 7,500, the revised GST rate has been fixed at 28 percent. Earlier, the rate applied to tariffs above Rs 5,000. Now hotels with tariffs between Rs 2,500 and Rs 7,500 will attract a GST rate of Rs 18 percent and above that 28 percent.

Restaurants will now attract a tax rate of 18 percent from the 28 percent rate that was decided earlier.

Kerala, which draws a substantial portion of its revenue from the tourism industry, had sought a reduction in the GST rates on hotels and restaurants.

Welcoming the decision to reduce the tax rates on restaurants, Vithal Kamat, executive chairman and managing director of Kamat Hotels said the tariffs on hotels however, should have been uniform. “There should have been only one tax rate of 18 percent irrespective of the tariff. It is important that taxation has to be uniform,” he told BloombergQuint over the phone.

The council also cleared tax rates for lotteries, which will attract a tax rate of 12 percent if they are run by state governments and 28 percent if they are outsourced.

I-T Preparedness

The GSTN’s preparedness was discussed at length and 65.6 lakh taxpayers have registered, the finance minister said. This accounts for around 81 percent of total taxpayers, he added.

Out of the total taxpayers, some would come under the exemption threshold and will not have to register.

Speaking to reporters after the GST Council meeting, Kerala Finance Minister Thomas Isaac said GSTN is not fully prepared.

But we decided to take the risk rather than delay the rollout. It is something like building a bridge while walking over the bridge.
Thomas Isaac, Kerala Finance Minister

Jaitley as well as state finance minister also dispelled any doubts on the 1 July deadline for GST rollout. Haryana Finance Minister Captain Abhimanyu said there is broad consensus among all status that the new indirect tax regime will be implemented from the midnight of 30 June.

State of Readiness

GST is expected to simplify the tax collection procedure, making it easier to administer and enforce as well as help remove double taxation at various levels. It is estimated to add 2 to 4 percentage points to the country’s GDP.

The Jammu and Kashmir Assembly was recently adjourned indefinitely without taking up the GST Bill. The state will now take up the Bill after an all-party panel submits its report. West Bengal has passed an Ordinance, while three states are expected to pass the bill in the next ten days.

All states are expected to clear the GST Bills by the end of next week.

(This article was originally published on BloombergQuint.)

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