The 22nd GST Council Meeting was held at New Delhi on the 6th of October 2017. In the meeting, various decisions and changes pertaining to GST return filing, composition scheme, GST rates have been announced. The various measures announced in the 22nd GST Council will tremendously improve ease of compliance for SMEs. In this article, we summarise the key decisions made in the 22nd GST Council Meeting.
GST Return Filing
All regular taxpayers registered under GST were currently required to file 4 GST returns every month namely GSTR 3B, GSTR 1, GSTR 2 and GSTR 3. Filing 4 GST returns a month and maintaining GST compliance was a major burden for small businesses that have limited resources. Hence, to reduce the compliance burden for small businesses and improve ease of doing business, a decision was taken to reduce the number of GST returns for small businesses.
GST Return Filing for SMEs
Small and medium enterprises (SMEs) with an annual aggregate turnover of less than Rs.1.5 crores will no longer be required to file GSTR 1, GSTR 2 and GSTR 3 return every month. Instead, SMEs will be allowed to file quarterly GST returns and make quarterly GST payments, whether or not enrolled under the GST composition scheme.
SMEs will be allowed to file quarterly GST returns starting from the October – December 2017 quarter. For now, all regular taxpayers will be required to file monthly GSTR 1, GSTR 2, GSTR 3 and GSTR 3B return for the months of July, August and September 2017. The due date for July 2017 GSTR 1 return, GSTR 2 return and GSTR 3 return has been announced. The due dates for August and September GSTR 1, GSTR 2 and GSTR 3 returns will be announced shortly.
GST Return Filing for Businesses with Over Rs.1.5 Crore Turnover
All persons having GST registration with a turnover of more than Rs.1.5 crore per year will be required to file monthly GST returns in form GSTR 1, GSTR 2 and GSTR 3. GSTR 3B will have to be filed by all taxpayers for the months of July to December 2017, irrespective of annual aggregate turnover.
GST registration was earlier mandatorily required for any person who undertook inter-state (selling goods or services from one state to another state) irrespective of aggregate annual turnover. In the 22nd GST Council, it has been decided to exempt service providers from this criteria. Hence, service providers will now be allowed to undertake inter-state sales of upto Rs.20 lakhs without obtaining GST registration.
It is important to note that only service providers have been provided this exception. Any person supply goods will still be required to obtain GST registration mandatorily, if they undertake inter-state sales.
Reverse Charge Mechanism Suspended
The 22nd GST Council has decided to suspend the GST reverse charge mechanism. Under reverse charge, the recipient of a service is required to pay GST on behalf of the supplier. Sub-section (4) of section 9 of the CGST Act, 2017 pertains to GST reverse charge and is reproduced below for reference:
“The central tax in respect of the supply of taxable goods or services or both by a supplier, who is not registered, to a registered person shall be paid by such person on reverse charge basis as the recipient and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both.”
Since, registered taxpayers were required to pay GST on reverse charge basis when they purchased from an unregistered person (Most times a micro or small business), many registered business stopped transacting with micro and small businesses. Hence, the GST Council has decided to suspend the reverse charge mechanism. Now, registered taxpayers can purchase from unregistered persons without having to pay GST on reverse charge basis. This measure will provide a major boost to micro, small and medium businesses.
GST on Advances Received NOT Required for SMEs
As per GST rules, whenever a taxable person receives advance, an advance receipt voucher must be issued and the GST on the advance received must be remitted to the Government. In case supply was later not provided and refund of advance was provided to the customer, then the supplier would have to claim refund. This caused tremendous difficulty for small and medium businesses.
As per the decision of 22nd GST Council, it has now been decided that taxpayers having annual aggregate turnover up to Rs. 1.5 crores will not be required to pay GST at the time of receipt of advances on account of supply of goods. The GST on such advance received will be payable only when the supply of goods is made.
Transportation of Goods by GTA
Goods Transport Agency were not extending services to unregistered persons and were in many cases requesting GSTIN for transporting goods. The GST Council in the 22nd meeting has clarified that GTAs will not need any GSTIN for providing transportation services, thereby removing the hardship faced by SMEs.
GST Composition Scheme
The GST Composition Scheme can be availed by SME taxpayers to reduce compliance and tax burden. The 22nd GST Council has decided to form a Group of Ministers (GoM) to examine measures to make the composition scheme more attractive for SMEs.
Further, entities with an aggregate turnover of upto Rs.75 lakhs were only eligible for enrolling under the GST Composition Scheme. The 22nd GST Council has decided to increase the aggregate turnover to Rs.1 crore.The aggregate turnover threshold for special category States, except Jammu & Kashmir and Uttarakhand, has also been increased to Rs. 75 lacs from Rs. 50 lacs. The turnover threshold for Jammu & Kashmir and Uttarakhand has been fixed at Rs. 1 crore. With the increase in aggregate turnover threshold, more SMEs will now be eligible for enrolment under the GST Composition Scheme.
Due Date for Enrolling under GST Composition Scheme Extended
The due date for enrolling under the increased threshold has been made available to both migrated and new taxpayers up to 31.03.2018. Also, once a business has enrolled under the Composition Scheme, the scheme will become operational from the 1st date of the succeeding date.
Due Date of first GSTR 4 Return for Composition Scheme Dealers Extended
The due date for filing GSTR 4 return for July to September 2017 by taxpayers registered under composition scheme has been extended to 15.11.2017. Also entities opting for composition scheme will have to now file GSTR 4 return only for that portion of the quarter from when the scheme becomes operational and can file returns as a normal taxpayer for the preceding tax period.
Implementation of TDS and TCS Provisions Postponed
TDS and TCS provisions of the GST is applicable to certain Government Department and E-Commerce Operators. To help the taxpayer ecosystem gradually absorb the changes in the indirect tax regime, the Government has decided to postpone the TDS/TCS registration and operationalisation to 31st March 2018.
E-Way Bill Implementation Postponed
As per E-Way bill rules, any transportation of goods with a value of more than Rs.50,000 would require an e-way bill. The e-way bill rules were earlier supposed to be implemented before December 2017. The GST Council has now decided to postpone the implementation of e-way bill provisions and rules to 1st January 2018. Hence, w-way bill rules will be operationalised in a staggered manner across India from 1st January 2018 to 1st April 2018.