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Return timelines extended: India Inc gets GST filing breather for 2 months

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Finance Minister Arun Jaitley
Arun Jaitley, Union minister for finance and corporate affairs, chairs the 17th GST Council meeting at Vigyan Bhavan in New Delhi on Sunday. Photo: PTI

Amid doubts in some quarters over the tech preparedness for the goods and services tax (GST), the high-powered GST Council on Sunday decided to introduce the new indirect tax system from the midnight of June 30-July 1, but gave a relaxed timetable and exemption from penalties and late fees to industry while filing returns in the first two months. 

However, some states expressed fears that the relaxation given on filing returns would lead to a revenue loss for them.

“We don’t have the luxury of time to defer the implementation of the GST... The official launch of the GST would take place on the midnight of June 30 and July 1,” Union Finance Minister Arun Jaitley told reporters after a five-and-a-half-hour meeting of the Council, whose chairman he is.

Revenue Secretary Hasmukh Adhia said the Centre was ready, but it was companies that wanted time to plug in. “GST Suvidha Providers and other software providers wanted 10-15 days’ time to test the system. Besides, banks, civil aviation, and telecom wanted more time to get their system in place.” 

The Council also approved the anti-profiteering rules. A five-member anti-profiteering authority will be set up to decide on levying penalty if businesses do not pass on the benefit of price reduction to consumers under the GST regime. The authority, to be headed by a retired secretary-level officer, can take suo motu action, besides acting on complaints of profiteering.

Where the consumer cannot be identified, the amount would be credited to the consumer welfare fund, according to an official.

The Council decided to have two GST rates for lotteries, depending on whether these are run by states or private players, tweaked the criteria for tax rates for the hotel industry, and came up with a negative list for the composition scheme.

It also lowered the threshold of turnover for availing of the composition scheme to Rs 50 lakh a year in the case of Northeastern states and Himachal Pradesh. 

It decided to defer implementing the e-way Bill and have an existing system of states in its place for the time being.

According to the relaxed timetable for filing returns, the assessees could file their detailed invoice-based returns by September 5 for July, Adhia said. Had this relaxation not been given, the assessee would have to file returns by August 10.

Similarly, for August, these returns could be filed by September 20, a relaxation of 10 days, Adhia said.
However, the businesses will have to file Form 3B by August 20 in the case of July transactions, and by September 20 in the case of August transactions. These would be based on their own assessments of their tax liability and input credit. Under normal circumstances, these returns are auto-generated under the GST system.

Later self-assessed returns would be matched with auto returns and the difference, if any, would have to be paid by the assessee, the revenue secretary said.

“This would help assessees get the practice of filing returns and the system will also not get unnecessary load,” Jaitley said.

The finance minister, however, said that this was being done because a number of traders and companies were not sure of their preparedness.

However, some states, including Assam, feared that they would lose revenues due to the relaxed timeline for filing returns. But, Adhia said Form 3B and filing taxes based on them would ensure that the government did not lose revenues.

No late fees and penalty would be levied for the filing of returns for these two months.

“This is intended to provide a sense of comfort to the taxpayers and give them elbow room to attune themselves with the requirements of the changed system,” an official statement said.

Jaitley, however, said that from September, there would be strict adherence to the timeline.

So far as tech preparedness is concerned, Jaitley said 6.56 million registrations had been made in the GST Network (GSTN). The 6.56 million is 81 per cent of the 8.01 million registrations under the state-value added tax, central excise duty and service tax. 

These 8.01 million registrations had some common registrations as well, Jaitley pointed out, indicating that registrations under the GSTN were progressing well.

Registration under the GSTN will re-open from June 25. Adhia appealed to businesses not to panic and rush for registrations if they had provisional identity numbers.

The Council also decided to defer the implementation of the e-way bill, which is an electronic permit required for moving goods worth over Rs 50,000 - both intra-state or inter-state. Jaitley said there were different views on the issue and hence it was decided that states which had their own system might continue till the bill was put into effect.

“The decision to leave e-way bills to the states for now would increase complications for businesses, which were expecting to operate in a simpler environment for inter-state trade. Hopefully e-way bills will be used only for select goods and on a highly restricted basis and will not become a mandatory transit document,” M S Mani of Deloitte said.

There were also differences between states over the issue of tax on lotteries. Kerala wanted it to be at 28 per cent and other states at lower rates. Finally, it was decided that state-run lotteries will have 12 per cent, while state-authorised lotteries, run by private players, will attract 28 per cent. 

In a relief for air-conditioned hotels, the Council decided to raise the threshold of tariff for the 28 per cent tax to Rs 7,500 from Rs 5,000 proposed earlier. Those in the range of Rs 2,500-7,500 would attract 18 per cent.

The Council came up with a negative list for the composition scheme which have three items only - ice cream, pan masala, and tobacco. 

The composition scheme is a facility for medium and small enterprises to pay a lower tax under the GST regime, without availing of input tax credit.

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