On May 28, 2021, the 43rd GST Council meeting took place. After more than half a year, the GST Council convened. The meeting was presided over by Smt. Nirmala Sitharaman, the Union Minister of Finance.
Other attendees also included the Finance Ministers of the states and union territories (UTs), along with senior officers from the Ministry of Finance and the states and UTs. Furthermore, the Union Minister of State for Finance and Corporate Affairs, Shri Anurag Thakur, was also present to actively participate in the meeting.
The last GST Council Meeting took place on October 5th, 2020.
The Council decided to extend the compensation cess levy beyond the five-year transition period. This extension will continue for as long as necessary to close the revenue gap.
Additionally, the Council increased the shortfall amount in the borrowing options. The previous amount of INR 97,000 crores was raised to INR 1 lakh and 10 crores.
The Proposal
The government has received demands to exempt GST on medical equipment and products. These include gloves, face masks, hand sanitizers, PPE kits, and temperature scanners.
The Key Agendas of the 43rd GST Council Meeting
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Ad-hoc Exemptions
Orders issued pursuant to the Customs Act, 1962, Section 25(2), shall be presented to the GST Council.
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Second IGST Settlement
Status of Group of Ministers on second IGST settlement.
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Concerns Pertaining to the GSTN
- The chairman may reduce manpower to approve the extension of Projects REAP, LEAP, and BIFA until March 31, 2022, on a time and material basis.
- The Council approved, in principle, the expansion of the IRP project’s scope. This expansion aims to include e-invoice registration, issue IRNs, lower the turnover threshold, and accommodate multiple IRPs if necessary.
- Proposal to approve deputation guidelines and ask the States to supply the GSTN with experienced personnel with SGST.
- Update on the status of the conversion of the Goods and Services Tax Network (GSTN) into a fully government-owned company and the transfer of shareholding to the States.
- Status of Payment by the States and Waiver of Interest on delayed receipt of Advance User Charges (AUC) from a few states and CBIC.
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Recommendations by the Law Committee
- The Law Committee has recommended certain issues for the GST Council to consider, including the rationalization of the late fee levied under section 47 of the CGST Act.
- Proposal to amend the CGST Act, 2017’s return-related provisions.
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GST Regulation and Process
Reduction of Late Fee for FORM GSTR-3B for July 2017 to April 2021 calendar months Amnesty to clear up outstanding returns under the GST system.
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Amendments
- Notifying the Finance Act of 2021’s Section 112 regarding the CGST Act’s Section 50 Amendment.
- Proposal to change the name of the program from quarterly return and monthly payment (QRMP) to quarterly return and quarterly payment (QRQP).
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COVID Cess
Seeking concurrence for levy of COVID-19 cess on the power and pharmaceutical sector.
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Fitment Committee Recommendations
Issues recommended by the Fitment Committee for the consideration of the GST Council.
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Imposition of GST on Extra Neutral Alcohol
Applying the Goods and Services Tax to Extra Neutral Alcohol (ENA) and Increasing GST Revenue.
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Recommendations by the IT Grievance Redressal Committee
The 14th IT Grievance Redressal Committee made several key decisions and recommendations. Additionally, an agenda was set for the Council’s final decision, ensuring a structured approach to addressing IT-related concerns.
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State Revenue
Examining the state of revenue under the goods and services tax.
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Problems Pertaining to GST Compensation Cess
Proposal to undertake problems related to GST Compensation Cess.
Highlights of the 43rd GST Council Meeting
At the 43rd GST Council meeting on May 28, 2021, the Finance Minister made the decision to exempt some COVID-19 relief materials and some medications for particular diseases. Justification of late fees through limiting the maximum amount and extending the deadlines, along with elucidation of the annual return and reconciliation statement. The major highlights of the meeting are as follows:
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Exemption on Import of Particular Medications
Till August 31, 2021, the government exempted IGST on imports of COVID-related relief supplies and anti-black fungus medications, even if purchased or intended for donation to the government or any relief organization based on state authorities’ recommendations.
The GOM must submit its report by June 8, 2021.
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Reduction of GST Rates on a Few Goods and Services
The Council revised the GST rate on various goods and services and provided clarifications on key issues, including government-sponsored midday meals, medicine rate reductions, and education board fee exemptions.
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Amnesty for Taxpayers
The Council recommended implementing an amnesty program to relieve taxpayers from the burden of paying late fees for unfiled returns. The maximum amount of late fees is INR 500 (INR 250 CGST and SGST each) for taxpayers with no liability, and INR 1,000 (INR 500 CGST and SGST each) for all other taxpayers per return.
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Rationalization of Late Fee
During the 43rd GST Council Meeting, members discussed rationalizing late fees to ease the burden on small taxpayers.
| GST Return Form | Capping Criteria | Maximum Late fees per return |
| GSTR 1 and
GSTR 3B |
Taxpayers having NIL liability | INR 500 (INR 250 CGST and SGST each) |
| Other taxpayers having turnover up to 1.5 crores in preceding year | INR 2,000 (INR 1,000 CGST and SGST each) | |
| Other taxpayers having turnover between 1.5 crores to 5 Crores in preceding year | INR 5,000 (INR 2,500 CGST and SGST each) | |
| Other taxpayers having turnover
more than 5 crores in preceding year |
INR 10,000 (INR 5,000 CGST and SGST each) | |
| GSTR 4 | Taxpayers having NIL liability | INR 500 (INR 250 CGST and SGST each) |
| Other taxpayers | INR 2,000 (INR 1,000 CGST and SGST each) | |
| GSTR 7 | Wherever GSTR 7 is applicable | INR 50 per day (INR 25 for CGST and SGST each) up to maximum of INR 2,000 (INR 1,000 CGST and SGST each) |
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Relaxations to the Taxpayers
The following additional relaxations are being given to the taxpayers:
| Taxpayer’s Turnover | Return and Period | Total Interest Payment | Late Fees Waiver |
| Less than 5 Crores | GSTR 3B and PMT 06 (March 2021) | For first 15 days- Nil
For next 15 days- 9% After 45 days- 18% |
Till 60 days |
| GSTR 3B and PMT 06 (April 2021) | For first 15 days- Nil
For next 15 days- 9% After 30 days- 18% |
Till 45 days | |
| CMP 08
(March 2021) |
For first 15 days- Nil
For next 15 days- 9% After 45 days- 18% |
Till 45 days | |
| GSTR 3B and PMT 06 (May 2021) | For first 15 days- Nil
For next 15 days- 9% After 30 days- 18% |
Till 30 days | |
| More than 5 Crores | GSTR 3B (May 2021) | For first 15 days- 9% and
18% thereafter |
Till 15 days |
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Amendments for Interest Payment
Retrospective amendment to section 50 of the CGST Act, requiring notice as soon as possible and allowing for interest to be paid on a net cash basis as of July 1, 2017.
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Return Filing System
To make the current GSTR-1/3B return filing system the default return filing system in GST, the GST Council proposed amending a few sections of the Act.
43rd GST Council Meeting Outcomes
- Extension of the GSTR-1/IFF filing deadline by fifteen days for the month of May 2021.
- GSTR-4 filing deadline for FY 2020–21 extended to July 31, 2021.
- The deadline for submitting ITC-04 for QE March 2021 has been extended to June 30, 2021.
- Cumulative use of rule 36(4) in the tax return for the months of April, May, and June of 2021 in order to claim ITC.
- Permitting businesses to file their returns by August 31, 2021, using the Electronic Verification Code (EVC) rather than the Digital Signature Certificate (DSC).
- Subject to certain exceptions, the deadline for completing various actions under the GST Act by any authority or by any person falls between April 15, 2021, and June 29, 2021. However, it may be extended until June 30, 2021.
Also Read:
GSTR-4 Due Date And Filing: A Complete Guide
GSTR 1 Details: Everything You Need to Know
What is Expected From the 43rd GST Council Meeting?
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Additional Relief Initiatives Due to the COVID-19 Pandemic
The state governments have made several appeals to the GST Council to lower the GST rates on a range of necessary medical supplies to combat COVID-19, including patient treatment.
The state governments have made many petitions to the GST Council to lower the GST rates on a range of necessary medical supplies to combat COVID-19, including patient treatment.
Regarding the GST on vaccines, the GST Council’s Fitment Committee has recommended against removing the current 5% GST exemption for COVID-19 vaccines. The Fitment Panel stated that the Centre and the states would ultimately bear the GST burden since the federal and state governments primarily purchased vaccinations and provided them to the general public at no cost.
Considering the severity of the pandemic, a life-saving action, and a negligible financial loss, the Council may decide to accept the ruling and increase the benefit.
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Scheme of Amnesty for Small Taxpayers under GST
In response to the pandemic, the Council plans to introduce an amnesty program on late fees for filing GST returns, aiming to provide significant relief to small taxpayers and MSMEs nationwide. All of the outstanding GSTR-3B returns from July 2017 through April 2021 are likely to be covered under the program. Moreover, this amnesty program may be in effect from June 1, 2021, to August 31, 2021.
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Rationalization of GST Rate for Particular Items
The Council might talk about lowering the 28% GST rate that presently applies to two-wheelers. It is anticipated to increase income that the epidemic had an adverse effect on. Any rate cut would enable two-wheeler manufacturers to boost sales by offering more competitive pricing. Similarly, higher tractor sales suggest a rise in rural demand.
The subject of charging GST on natural gas may also be brought up by the GST Council.
In addition, sources informed IANS that a three-tier GST structure that bases costs on use might include natural gas. Consequently, the Council may reduce the GST on residential piped natural gas (PNG) to 5%. Meanwhile, commercial PNG could be taxed at a standard rate of 18%. Additionally, automotive fuel CNG might be subject to a higher tax rate of 18%.
The IANS has reported that a three-tier GST structure based on usage might include natural gas. Consequently, the taxation of piped natural gas (PNG) for residential use may be set at a lower rate of 5%. Meanwhile, the taxation of PNG for commercial use may be higher at an average rate of 18%. Additionally, the taxation of CNG for automobile fuel may reach a maximum rate of 28%.
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Resolving the Problems Arise from the Inverted Tax Structure
An inverted tax structure correction is necessary in several industries, including fertilizers, steel kitchenware, solar panels, tractors, tires, electrical transformers, pharmaceuticals, textiles, clothing, and railroad locomotives.
An “inverted tax” occurs when the tax rates on input and capital items exceed those on finished goods. This disparity increases the blockage of product input credit claims. Additionally, it creates multiple administrative and legal challenges.
Although there is currently a 10% tariff on imported tires, there is a 20% charge on the inputs, such as rubber. In contrast, solar modules are duty-free; however, the components they are made of are subject to a 5–10% tax.
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Rework the Necessity for Borrowing and the Compensation Gap
To reevaluate the compensation gap and borrowing need, a number of states have requested the Union Finance Minister, Nirmala Sitharaman, to convene a meeting of the GST Council with as little delay as feasible.
States also wish to investigate extending the GST compensation question past July 2022 in the Council due to the ongoing economic uncertainties.
Several states have accused the federal government of failing to convene the GST Council at least once per quarter, as mandated by the Constitution.
Also Read: 42nd GST Council Meeting Highlights, Updates, Outcome, And More
More Information
You can get more information regarding the 43rd GST Council Meeting by visiting the official website of the Central Board of Indirect Taxes and Customs (CBIC) at https://cbic-gst.gov.in/ or https://gstcouncil.gov.in/gst-council-meetings
