Three Expectations from GST Council Meeting on 5 October 2020

The 42nd GST Council meeting is all set to discuss a whole host of issues proposing compliance relaxations, finding a solution to the on-going compensation cess issue of states

1) GST Compliance Due Dates

• GST Council likely to allow UPI & IMPS Option to make payment. Currently payments can be made by only GST-authorised banks
• GST Council to extend GSTR-1 & 3B system till March 21
• Council to change due date of filing of GSTR-1 by quarterly taxpayers till 13th of month next to the quarter
• Council to consider limiting period for taking cognisance of prosecution under GST Act
• Council likely to limit the period in case of fine to a max of six-month imprisonment, in case of imprisonment between 1–3 years to 3 years
• GST council may re-think to extend GST Amnesty for GST taxpayers to avail late fee waiver benefit
• Extend GSTR-3B amnesty scheme to 31.12.2020
• Capped late fee to ₹500
• Extend all GSTR-1 due date from April 20 to 31.03.2021
• Relief for provision of section 16(4)

2) GST Rates

• GST Council-nominated fitment committee proposes no distinction should be made in ayurvedic & alcohol-based hand sanitizers
• Fitment committee examined in detail proposal to reduce rates for Ayurveda/Unani/Siddha ingredients-based hand sanitizer from 18% to 12%
• Fitment Committee leaves it for Council to consider whether to re-classify ayurvedic hand sanitizer under Ayurvedic products category & not in disinfectant category
• Ayurvedic products attract 12% GST, disinfectants attract 18% GST
• Council likely to exempt satellite launch services from GST, move to encourage private Indian enterprises to launch satellite through Indian satellite launch facilities

3) GST Cess Compensation Issue

• Council to discuss ongoing compensation issue
• Likely to revisit two options given by Centre to meet compensation shortfall
• Centre to present calculation of compensation cess collected and released so far
• According to Centre, only ₹15,000 crore is balance of cess collected & not released so far
• Average revenue gap between April–August of states has risen to 56% in 2020 vs 21% in 2019
• GST Council to consider proposal to extend cess period beyond 5 years, likely to consider extending cess by 2 more years to meet shortfall
• Council likely to constitute a committee of officers to work out anticipated shortfall and other issues
• Govt open to enhance the borrowing limit under option 1 suggested to make good for compensation cess shortfall
• Centre sought the opinion of Attorney General on the extension of cess

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