The 39th meeting of GST council held in New Delhi under the chairmanship of Union Finance & Corporate Affairs Minister Smt. Nirmala Sitharaman made some important announcements including deferral of e-invoicing system. Some of the recommendations made by NASSCOM have been accepted by the government. The summary of key announcements made is provided below:
a) Extension of due dates for generation of e-invoice and QR code –NASSCOM had made a representation to GST Council including GST Secretariat highlighting the difficulties faced by IT-BPM industry in implementation of e-invoicing system on a mandatory basis from April 1, 2020. In view of the fact that ERP and accounting systems operate at a global level and various businesses have their own nuances in terms of the application development process and business model requirements, we requested that more time be provided to industry to prepare itself for -adopting the e—invoicing mechanism. Our representation to GST Council can be accessed from https://community.nasscom.in/communities/policy-advocacy/nasscoms-representation-on-deferment-of-implementation-date-of-e-invoice-system-under-gst.html.
In line with our recommendation, the Government has proposed an extension for implementation of e-invoicing mechanism till October 1, 2020. Further, certain class of registered persons (insurance company, banking Company, financial institutions, non-banking financial institutions GTA, passenger transportation services etc.) will be exempted from issuing e-invoices or capturing dynamic QR code.
b) Extension of exemptions from payment of IGST and Compensation Cess on capital goods imported made by STPI and EOU extended till March 31, 2021
NASSCOM had made a representation to CBIC Chairman on the need to extend the exemption from IGST on import of capital goods by STPI/ EOU. The exemption was expiring on March 31, 2020 post which companies engaged in 100% exports had to incur huge investments by way of capital expenditure.
In line with our recommendation, the Government has extended exemption from IGST for STPI and EOU till March 31, 2021. This is a welcome move and would relive Micro, Small & Medium Enterprises (MSMEs) from huge financial burden.
Summary of other changes announced in the 39th GST Council meeting:
Law and Procedure related changes:
- Payment of interest on delay in payment of GST – The interest on delay in payment of GST shall be charged on the net cash tax liability w.e.f. July 01, 2017 (law to be amended retrospectively to enable this aspect)
- Relaxation in furnishing annual returns and reconciliation statements in Form GSTR 9 and GSTR 9C respectively– Certain relaxations have been provided in respect of furnishing annual returns and reconciliation statements as under:
- Relaxation from furnishing reconciliation statement in Form GSTR 9C for FY 2018-19 for taxpayers having aggregate turnover below INR 5 crores;
- Due Date for filing of Annual Return and Reconciliation Statements for FY 2018-19 to be extended till June 30, 2020 (earlier the due date was March 31, 2020);
- Late fee to be waived for delay in filing of Annual Return and Reconciliation Statement for FY 2017-18 and FY 2018-19 for taxpayers having aggregate turnover less than INR 2 crores.
- Deferral of introduction of simplified return system – The existing system of Form GSTR-1 and Form GSTR-3B will be continued till September, 2020 (earlier, the simplified return system was to be introduced w.e.f. April 01, 2020)
- Extension of the time limit to finalize e-wallet scheme upto March 31, 2021;
GSTN system changes:
In order to address compliance related issues and to put a curb on tax evasion, it has been suggested to link:
- the details of outward supplies in Form GSTR 1 to the liability declared in Form GSTR 3B; and
- Input Tax Credit in Form GSTR 3B to the details of the supplies reflected in Form GSTR 2A.
The above suggestions and initiatives are targeted to be implemented by July 31, 2020.
Rate related changes:
- GST rate on mobile phones to be increased from 12% to 18%
- Rationalisation of GST on Maintenance, Repair and Overhaul (MRO) services in respect of aircraft.
Copy of the press releases issued are attached for your reference.