Details of decision taken in 43rd GST Council Meeting on 28th May, 2021, By CA Monish Shah

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CA Monish Shah, Chartered Accountant

Covid relief items: –

  1. As a COVID-19 relief measure, a number of specified COVID-19 related goods such as medical oxygen, oxygen concentrators and other oxygen storage and transportation equipment, certain diagnostic markers test kits and COVID-19 vaccines, etc., have been recommended for full exemption from IGST, even if imported on payment basis, for donating to the government or on recommendation of state authority to any relief agency. This exemption shall be valid upto 31.08.2021. Hitherto, IGST exemption was applicable only when these goods were imported “free of cost” for free distribution. The same will also be extended till 31.8.20201. It may be mentioned that these goods are already exempted from Basic Customs duty. Further in view of rising Black Fungus cases, the above exemption from IGST has been extended to Amphotericin B.
  1. As regards individual items, it was decided to constitute a Group of Ministers (GoM) to go into the need for further relief to COVID-19 related individual items immediately. The GOM shall give its report by 08.06.2021.

Other goods: –

  1. To support the Lympahtic Filarisis elimination programme being conducted in collaboration with WHO, the GST rate on Diethylcarbamazine (DEC) tablets has been recommended for reduction to 5% (from 12%).
  1. Certain clarifications amendments have been recommended in relation to GST rates. Major ones are, –
    1. Leviability of IGST on repair value of goods re-imported after repairs
    2. GST rate of 12% to apply on parts of sprinklers/ drip irrigation systems falling under tariff heading 8424 (nozzle/laterals) to apply even if these goods are sold separately.

 Services: – 

  • To clarify those services supplied to an educational institution including anganwadi (which provide pre-school education also), by way of serving of food including mid- day meals under any midday meals scheme, sponsored by Government is exempt from levy of GST irrespective of funding of such supplies from government grants or corporate donations.
  • To clarify these services provided by way of examination including entrance examination, where fee is charged for such examinations, by National Board of Examination (NBE), or similar Central or State Educational Boards, and input services relating thereto are exempt from GST.
  • To make appropriate changes in the relevant notification for an explicit provision to make it clear that land owner promoters could utilize credit of GST charged to them by developer promoters in respect of such apartments that are subsequently sold by the land promotor and on which GST is paid. The developer promotor shall be allowed to pay GST relating to such apartments any time before or at the time of issuance of completion certificate.
  • To extend the same dispensation as provided to MRO units of aviation sector to MRO units of ships/vessels so as to provide level playing field to domestic shipping MROs vis a vis foreign MROs and accordingly, –

(a) GST on MRO services in respect of ships/vessels shall be reduced to 5% (from 18%).

(b) PoS of B2B supply of MRO Services in respect of ships/ vessels would be location of recipient of service

  • To clarify that supply of service by way of milling of wheat/paddy into flour (fortified with minerals etc. by millers or otherwise)/rice to Government/ local authority etc. for distribution of such flour or rice under PDS is exempt from GST if the value of goods in such composite supply does not exceed 25%. Otherwise, such services would attract GST at the rate of 5% if supplied to any person registered in GST, including a person registered for payment of TDS.
  • To clarify that GST is payable on annuity payments received as deferred payment for construction of road. Benefit of the exemption is for such annuities which are paid for the service by way of access to a road or a bridge.
  • To clarify those services supplied to a Government Entity by way of construction of a   rope-way attract GST at the rate of 18%.
  • To clarify that services supplied by Govt. to its undertaking/PSU by way of guaranteeing loans taken by such entity from banks and financial institutions is exempt from GST.

 Measures for Trade facilitation: –

 GST Amnesty Scheme

 To provide relief to the taxpayers, late fee for non-furnishing FORM GSTR-3B for the tax periods from July, 2017 to April, 2021 has been reduced as under: –

Period July-2017 to April-2021
When to File to get benefit ? 01/06/2021 to 31/08/2021
   
Nil Return 500 Per Return
Others 1000 Per Return

 

 Rationalization of late fees u/s 47

 

Return – GSTR-3B and GSTR-1 Minimum Maximum
     
Nil Liability 20 Per Day 500
Upto 1.5 Crore 50 Per Day 2000
More than 1.5 Crore but not exceeding 5 Crore 50 Per Day 5000
More than 5 Crore 50 Per Day 10000
GSTR-4 Composition Annual Return
Nil Return 200 Per Day 500
Other 200 Per Day 2000

 

For the month of March, April & May, 2021

 

Aggregate Turnover
Tax Period Interest Rate Relaxation from due date Late Fee waiver from due date
For 1st 15 days For next few days There after
More than INR 5 crores March, April & May, 2021 9% 18% 18% 15 Days
Upto INR 5 Crores March, 2021 Nil 9% [For 45 days] 18% 60 Days
April, 2021 Nil 9% [For30 days ] 18% 45 Days
May, 2021 Nil 9% [For 15 days] 18% 30 Days
Upto INR 5 Crores – Quarterly filers March, 2021 Nil 9% [For 45 days] 18% 60 Days
April, 2021 Nil 9% [For30 days ] 18% 45 Days
May, 2021 Nil 9% [For 15 days] 18% 30 Days
Return under Composition Scheme Quarter ending March, 2021 Nil 9% [For 45 days 18%

 

 

        Certain other COVID-19 related relaxations to be provided, such as 

  1. Extension of due date of filing GSTR-1/ IFF for the month of May 2021 by 15 days.
  2. Extension of due date of filing GSTR-4 for FY 2020-21 to 31.07.2021.
  3. Extension of due date of filing ITC-04 for QE March 2021 to 30.06.2021.
  4. Cumulative application of rule 36(4) for availing ITC for tax periods April, May and June, 2021 in the return for the period June, 2021.
  5. Allowing filing of returns by companies using Electronic Verification Code (EVC), instead of Digital Signature Certificate (DSC) till 08.2021. 

         Simplification of Annual Return for Financial Year 2020-21: 

  1. Amendments in section 35 and 44 of CGST Act made through Finance Act, 2021 to be notified. This would ease the compliance requirement in furnishing reconciliation statement in FORM GSTR-9C, as taxpayers would be able to self-certify the reconciliation statement, instead of getting it certified by chartered accountants. This change will apply for Annual Return for FY 2020-21.
  2. The filing of annual return in FORM GSTR-9 / 9A for FY 2020-21 to be optional for taxpayers having aggregate annual turnover upto Rs 2 Crore;
  • The reconciliation statement in FORM GSTR-9C for the FY 2020-21 will be required to be filed by taxpayers with annual aggregate turnover above Rs 5 Crore.

      Section 50 – Interest on delayed payment of tax

Proviso to Section 50(1) shall be inserted retrospectively which was proposed in Union Budget 2021. The amendment will be made effective retrospectively w.e.f. 1st July 2017.

Interest will be calculated on net tax liability except when proceeding u/s 73 or 74 has been initiated. When proceedings will be initiated interest will be calculated on gross tax liability.

Telangana High Court Order in the case of  M/s. Megha Engineering & Infrastructures Ltd. where a decision was given against the taxpayer. The taxpayer was asked to make the payment of interest on gross tax liability. Will there be any reversal of such interest collected???

(The author is a well known Chartered Accountant practicing at Ahmedabad. He is also a vice president of CA Association Ahmedabad and giving his valuable service as Tax Today Expert)

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