GST Council agrees on simpler return filing process

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GST Network to become 100% govt. enterprise; Ministers to study cess on sugar

The Goods and Services Tax Council on Friday decided took a number of major decisions, including to convert the GST Network into a 100% government enterprise, and implement a single form for GST filing from the current three.

At its 27th meeting, the Council also decided to create a Group of Ministers to review the plan for imposition of a cess on sugar. The cess was meant to subsidise sugarcane farmers as their production cost is much higher than the selling price.

Returns filing reconciled

The Council has also decided to create another GoM to consider implementation of a 2% incentive for digital transactions. “There has been a discussion over the last several months on one method of return filing that Nandan Nilekani had suggested and another that the officials from the State governments had suggested,” Union Finance Minister Arun Jaitley said at a press conference after the video-conference meeting. “The Sushil Modi Group of Ministers has found a reconciliation between the two.”

Finance Secretary Hasmukh Adhia said the Council approved a single, monthly return form that would become applicable in six months. The current system of filing the GSTR-1 and GSTR-3B forms would continue till then. “After six months, there will be a single monthly return for everybody, except composition dealers and those who file returns with zero transactions,” he said. “They can file quarterly returns.” After this, for six more months, businesses will be able to avail provisional credit in the new form, even if their sellers have not uploaded their sales invoices.

“During these six months, the GST Network will continuously feed the dealer data about what is the gap between what he is claiming as provisional credit and what is the actual amount he should be getting based on sellers’ invoices,” he said.

After this transitional period, the new GSTR form will roll out in full and businesses will only be able to avail of input tax credit if their sellers have uploaded the invoices.

“The staggered introduction of the new returns would enable businesses to prepare for the same and make changes to their systems,” M.S. Mani, Senior Director at Deloitte India said in a note. “Businesses are relieved that they would no longer be penalised for their vendors’ omissions. Simplicity of the new returns would be key to its successful adoption by businesses as past experience with complicated forms and processes indicates that complexity reduces compliance.”

“While some of these ideas are welcome, the impossibility of the buyer to upload missing invoices or to take provisional credit [once the final phase rolls out] may lead to losses for businesses where the suppliers are not traceable and tax has been paid to them,” Abhishek Jain, Tax Partner, EY India said. “It may also impact cash flows on account of delayed credit in case of delay in upload of invoices by the sellers.”

“The other issue under consideration was the imposition of a cess on sugar, particularly considering that its cost has risen beyond ₹35 per kg, and the market price is between ₹26 and ₹28, and the sugarcane farmers are in great distress,” Mr. Jaitley said.

“How are such contingencies to be addressed in a GST regime? Are they to be addressed by an imposition of a cess, or through temporarily increasing a tax, or by some alternative mode of revenue raising.”

The Council agreed to create a Group of Ministers comprising five ministers, which will submit its recommendations regarding this issue to the Council within two weeks.

“While the decision on a sugar cess has been deferred for now, it would be ideal if it is not introduced given it was abolished when GST came in and GST was expected to subsume all such levies,” Pratik Jain, Partner & Leader, Indirect Tax at PwC India said. “If there is need for revenue augmentation, it can be done by increasing the GST rate rather than distorting the overall structure.”

The GST Council also agreed to the creation of a separate Group of Ministers to look into the issue of implementing a 2% incentive for digital transactions. This GoM will submit its recommendations by the next meeting of the Council.

Network ownership

Mr. Jaitley also said that the Council had decided that the government would buy the remaining 51% stake in the GST Network, which is currently under private sector ownership.

“It was agreed that the 51% held by these private entities should be taken over by the government and eventually the Centre and the States will hold 50% each,” Mr. Jaitley said. “The 50% of the States will be divided among themselves according to their GST ratios. The Council also recommended that the GSTN continue to employ people contractually and have the flexibility to get the best talent on the best terms from the market.”

“The said approval is quite a welcome measure especially with a blend of it having ensured the taxpayers data residing in the Government’s hands only as well as continuation of some required flexibilities like contractual hiring, unchanged terms and conditions for existing employees, etc,” Mr. Jain added.

The Minister said the Council also expressed its satisfaction about the revenue collected under the GST regime in the previous financial year.

Source -

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