GST Council 22^nd Meeting at New Delhi: Relief Measures at a Glance

22^nd meeting of GST Council in New Delhi held on 6^th Oct, 2017 was awaited eagerly by trade and industry. Many expectations were attached to it. The Gujarat assembly election is nearby and all stake holders were expecting some relief for smooth compliances like reduction in tax rates and ease in doing the business. As the expectations were high, the Council’s resolution were found to be trade friendly and some notable reliefs have been provided in many areas of GST.  The same can be summarized as under:

GST Composition Scheme

When the model GST draft law was circulated the composition scheme was made applicable to traders trading only in their own state and the aggregate turn was fixed at Rs. 50 lakhs. However, when the GST law was finalized, the aggregate turnover limit was raised to Rs. 75 lakhs. The same was not enough and now the Council has raised the aggregate turnover limit to Rs. 100 lakhs. It may be noted that composition scheme is suitable to traders having local business, generally engaged in B to C trade. They are entities mostly run by one man army. Thus, the relief is notable since the requirement of filing their periodical return is quarterly. The very raising of annual turnover limit upward at Rs. 100 lakhs would be welcomed by this sector. Further, the GST Council has decided to form a committee of  Ministers to find measures and give suggestions to make the composition scheme more worthy. In the case of special category of states, the annual turnover limit has been raised from Rs. 50 lakhs to 75 lakhs.

Filing of Periodical Returns

The burden of filing 37 minimum returns in a given financial years was under constant criticism. A study of GST worldwide would indicate that periodical returns prescribed are different for small business entities and major ones. In GST India all tax payers were dealt with common provisions and monthly three returns were prescribed irrespective of size of the tax payers. As per provisions related to filing of  monthly GSTR1 to GSTR-3B, these returns were required to be filed between 1^st of following month to 20^th of that month. Thus, practically Chartered Accountants/ consultants were the most sufferers, who were required to devote fully from 1^st to 20^th of the any given month. The burden on small and medium scale enterprises was uphill and they were to lose their precious time in meeting these compliances alone. After a great amount of criticism from all quarters, it is worth to hear that the Council has taken a prudent step to the effect that the business entities having annual turnover not exceeding Rs. 1.5 Cr. annually would now have to file their periodical return quarterly starting from 3^rd quarter, the applicable tax will also to be paid on quarterly basis. It is a great relief to small entities and it would reduce their compliances cost and save the time as well.  These changes are not applicable for the tax payers having annual turnover exceeding Rs. 1.5 Crore and they would continue to file their GSTR 1, 2,3 and 3 B as per provisions in force.

Reverse Charge Mechanism

The concept of reverse charge mechanism (RCM) was there in Service tax. In new GST regime this system of RCM has been applied in big way. Firstly compulsory RCM like GTA service, where the service receiver is compulsorily required to  discharge the tax liability services like transportation of goods by road (GTA) under RCM. The other was when a registered tax payer is obtaining any supply of goods or services and such supplier of goods or services is not registered under GST, the supply receiver is required to discharge tax liability as if he himself is supplier of goods or services. Towards this category of RCM, the only relaxation was added to the effect that on any given date if all supplies taken together are not exceeding Rs. 5,000/-, no tax under RCM was required to be paid. It is apparent that the Council came to a conclusion that there have been greater compliances liabilities on tax payers and all together the tax payers have been under tremendous compliances pressure. More so, when in many areas, the provisions are not clear and many doubts prevailed. To provide certain relaxations, the RCM tax liability has been suspended till 31^st March, 2018. It is expected that by that time tax payers would achieve the required perfection to meet day to day tax compliances. However, compulsory RCM like GTA services would continue to be in force.

The other changes are as under

• The services provided by a GTA to an unregistered person (under GST law) including unregistered casual taxable person other than the recipients liable to pay tax on GTA services under reverse charge shall be exempted from GST. However, it is felt that such relaxation may be abused.
• There is no need to take GST registration upto aggregate turnover of Rs. 20 lakhs (10 lakhs special category of states) even if the taxpayers are making inter-State taxable supplies of services. The modalities mas to how it would be implemented are awaited.
• The small tax payers having turnover upto Rs. 1.5 crore are not required to pay GST on advances received towards supply of goods.
• The provisions related to TDS/TCS related to registration and operationalization have been suspended till March 31, 2018.
• The e-way bill system shall be introduced in a phased manner from January 01, 2018 and shall be rolled out in pan India from April 01, 2018.
• The due date for filing return in case of composition dealers for the quarter July- September, 2017 has been extended to November 15, 2017. Further, the due date for filing return by Input service distributors for the months of July, August and September, 2017 has been extended to November 15, 2017.
• For exporters, the refund shall be made on October 10, 2017 for exports made in July, 2017 and on October 18, 2017 towards exports made in August, 2017.

These relaxations would definitely be welcomed by the trade. Though, it has been alleged that these measures have been announced keeping in view the forth coming election in Gujarat.

Contributed by: Mahendra K Kothari, Honorary Correspondent, Udaipur Times, Ahmedabad