RECENT DEVELOPMENTS IN GST

[Dr. Sanjiv Agarwal]

Now the Asian Development Bank (ADB) has predicted India’s economic growth outlook to be highly vulnerable to a prolonged outbreak of Covid pandemic or resurgence of cases. It has forecast a strong recovery in financial year 2021-22 with a GDP growth of 8 percent with mobility and resumption of business activities. Strict lockdown in April – June, 2020 hit the economic activity and private spending badly. According to ADB, it is crucial that containment measures, such as robust testing, tracking and ensuring treatment capacities are implemented consistently and effectively to stop spread of Covid-19 and provide a platform for sustainable recovery for next year onwards. The downside risks also include increase in public / private debt levels which will effect technology and infrastructure investment, rising non-performing assets (bad loans) and weakened financial system.

Further, S&P has predicted economic growth @ 10% in 2021-22 (as against shrink of 9% in 2020-21). Increasing rural incomes, investment and consumption may hold the key.

On a positive note, Indian economy has started picking up in Q2 of current fiscal as indicated by rise in power consumption, higher number of e-way bills generation, fright load up by over 12 percent on YOY basis, business resumption index (Nomura India) is up at 81% as against 44% in March, 2020 end and so on. It is just 18 points below the pre-pandemic normal. Retail inflation is now lower at 6.6% yet higher than 6% food inflation continues to be 9% plus. It is expected that retail inflation may moderate in coming months.

On the other hand, Reserve Bank of India (RBI) is committed to promote growth as the Indian economy recovers gradually from Covid 19. RBI has assured that it will take all necessary steps to ensure that there is enough liquidity in the system and promote economic growth. It has however, also cautioned that economic recovery is still not entrenched and is likely to be gradual only as efforts towards reopening of the economy are confronted with increasing infections.

GST Council is likely to meet next (42nd meeting) on 5th October, 2020 where in compensation cess issues as well as rate rationalization may be on top of agenda. The meeting, earlier scheduled for 19 September, 2020 has been postponed in view of the ongoing Parliament session.

The Finance Minister in Parliament’s ongoing session made a statement that GST Council will arrive at a common ground on ways to compensate states for the loss of revenue. The Government is committed to honour its commitments with regard to compensation payouts. Accordingly, even if it is an ‘act of god’ situation, GSTC will discuss on as to how to give compensation to states and on how to borrow to meet revenue gap. She has however, ruled out funding the same from consolidated fund of India and that cess has to be paid from compensation cess kitty only.

Government is making GSTR-3B filing to be easier and smooth as the GSTN system shall auto compute tax liability and input tax credit available for over one crore assessees.  The linking of returns is expected to give GSTN on edge in curbing under reporting of tax liability as well as over reporting of ITC. Form GSTR-2B data will flow into GSTR-3B and thus be auto populated for ascertaining tax dues.

CBIC has issued administrative instructions for recovery of interest on net cash tax liability w.e.f. 01.07.2017. Accordingly, it has been decided to address the issue through administrative arrangements, i.e., (a) For the period 01.07.2017 to 31.08.2020, field formations have been instructed to recover interest only on the net cash tax liability (i.e. that portion of the tax that has been paid by debiting the electronic cash ledger or is payable through cash ledger) and (b) wherever SCNs have been issued on gross tax payable, the same may be kept in Call Book till the retrospective amendment in section 50 of the CGST Act is carried out.

E-invoicing is going to commence from 1^st October, 2020 but now various industry bodies including MNC’s have sought its deferment at least till January, 2021 for want of proper preparedness , i.e. to develop requisites technical capabilities and festive season ahead. Thus, instead of it being mandatory, e-invoicing could be implemented on a voluntary basis from October, 2020 and made mandatory from January, 2021. Further, CBIC has recently extended the dates of filing GSTR 4 and GSTR 10 upto 31.10.2020 vide Notification Nos. 66 to 68 dated 21.09.2020.

Due dates of Form GSTR -3B

*A. Taxpayers whose principal place of business is in the States of Chhattisgarh, Madhya Pradesh, Gujarat, Maharashtra, Karnataka, Goa, Kerala, Tamil Nadu, Telangana, Andhra Pradesh, the Union territories of Daman and Diu and Dadra and Nagar Haveli, Puducherry, Andaman and Nicobar Islands or Lakshadweep.

*B.Taxpayers whose principal place of business is in the States of Himachal Pradesh, Punjab, Uttarakhand, Haryana, Rajasthan, Uttar Pradesh, Bihar, Sikkim, Arunachal Pradesh, Nagaland, Manipur, Mizoram, Tripura, Meghalaya, Assam, West Bengal, Jharkhand or Odisha, the Union territories of Jammu and Kashmir, Ladakh, Chandigarh or Delhi.

GST Portal Updates: Debit/Credit Notes de-linked with Invoice

Much awaited update has been carried out on GST portal which de-links Debit/Credit Notes with invoice. Earlier, in Form GSTR-1, along with details of Debit/Credit Notes, invoice date and invoice number pertaining to that Debit/Credit Notes was required to be mentioned as a mandatory field. Now, the portal has done away with this mandatory requirement of mentioning invoice date and invoice number while reporting details of Debit/Credit Note.

[Source: News dated 15.09.2020]

Delinking of Credit Note/Debit Note from invoice, while reporting them in Form GSTR 1/GSTR 6 or filing Refund

• Till now, original invoice number was mandatorily required to be quoted by the taxpayers, while reporting a Credit Note or Debit Note in Form GSTR-1 or Form GSTR-6.
• The taxpayers have now been provided with a facility on the GST Portal to:
  • Report in their Form GSTR-1 or in Form GSTR-6, single credit note or debit note issued in respect of multiple invoices.
  • Choose the note supply type as Regular, SEZ, DE, Export etc., to identify the table to which such credit note or debit note pertains.
  • Indicate Place of Supply (POS) against each credit note or debit note, to identify the supply type i.e. Intra-State or Inter-State.
  • Debit /Credit Notes can be declared with tax amount, but without any taxable value also i.e. if credit note or debit note is issued for difference in tax rate only, then note value can be reported as ‘Zero’. Only tax amount will have to be entered in such cases.
  • Similar changes have been made while reporting amendments to credit note or debit note.

[Source: GSTN]

No recovery of interest on gross tax liability

• The CBIC has issued an instruction to the Departmental, officers advising that recovery of interest shall be made only on net cash liability for the period 01-07-2017 to 31-08-2020. (i.e. that portion of tax that has been paid by debiting the electronic cash ledger or is payable through cash ledger).
• Further, show cause notices that have already been issued to taxpayers for recovery of interest on gross tax liability may be kept in call book till the retrospective amendment in section 50 of CGST Act, 2017 is carried out.

 (Source:  F. No. CBEC-20/01/08/2019-GST, dated 18-09-2020)

Time limit for issuance of invoice

Time limit for issuance of invoice in case of goods being sent on approval basis which falls during the period from 20th March, 2020 to 30th October, 2020 has been extended up to 31st October 2020.

(Source: Notification No. 66/2020- Central Tax dated 21.09.2020)

Late fees payable in case of delayed filing of GSTR-4

Late fees payable in case of delayed filing of GSTR-4 (for composition dealers) for the period July 2017 to March 2020 has been waived fully in case of Nil Return, and restricted to ₹ 500 per return in other cases if such GSTR-4 is furnished from 22th September, 2020 to 31st October, 2020.

(Source: Notification No. 67/2020- Central Tax dated 21.09.2020)

Late fees payable for delayed filing of Final Return (GSTR-10)

Late fees payable for delayed filing of Final Return (GSTR-10) has been restricted to ₹ 500 if such GSTR-10 is furnished from 22th September, 2020 to 31st December, 2020.

(Source: Notification No. 68/2020- Central Tax dated 21.09.2020)