The 37th meeting of GST council held under the chairmanship of Union Finance & Corporate Affairs Minister Smt. Nirmala Sitharaman brought some relief for the Information Technology (IT)/ IT Enabled Services (ITeS) sector. Some of the big ticket reforms were announced in the meeting. Provided below is a quick summary:
- In a welcome move, the Council has provided relief on 2 of the most debated upon issues in recent times and has recommended the following:
- Issuance of clarification on taxability of “intermediary services” in the case of supply of ITeS in supersession of the recent Circular No 107/ 26/ 2019-GST dated July 18, 2019; and
- Rescinding of Circular No 105/ 24/ 2019-GST dated June 28, 2019 issued in respect of post-sale discount.
As you are aware, NASSCOM has been advocating extensively on these 2 issues, particularly on the Intermediary Circular and we hope that all our concerns are addressed in the revised Circulars.
2. Amendments are proposed to Section 13(3) of the Integrated Goods & Services Tax Act (IGST Act) to provide that R&D services, including chip design provided by Indian companies on test kits to foreign clients by using sample test kits in India would qualify as “export of services”.
3. Following measures are also proposed on the refund front:
- Introduction of Integrated refund system with disbursal by single authority from September 2019; and
- Linking of Aadhar with registration under GST for claiming of refunds.
4. Changes to return filings:
- Relaxation in requirement of filing annual return in Form GSTR 9 for Financial Year 2017-18 and 2018-19 for taxpayers with aggregate turnover less than INR 2 Crores;
- Introduction of new return mechanism from April 2020 (earlier proposed from October 2019), in order to give ample opportunity to taxpayers as well as the system to adapt;
- Mechanism of allowing input tax credit only when the supplier has filed his return.
The above decisions will come into effect vide Gazette notifications/ circulars to be issued in due course of time.
Attached are the press releases containing details of these and other decisions for your reference.
We will keep you posted on further developments in this regard.