GST Council approves simple return

The GST Council today veered around to giving up to Rs 100 incentive for digital payments for purchases by consumers, approved a new model for single monthly return and decided to turn the GSTN into a Government-owned entity.
The panel, the highest decision-making body for Goods and Services Tax (GST) regime, however, deferred a decision on levying a cess on sugar after opposition from some states.
Later in the evening, the Union Finance Ministry announced setting up of two panels of state finance ministers — one for looking into the issue of cess on sugar and the other on incentives on digital payments.
The Group of Ministers on sugar cess will be headed by Himanta Biswa Sarma (Assam finance minister) and the one on promoting digital payments under GST by Sushil Modi (Bihar Deputy Chief Minister).
Briefing about the decision taken at the 27th meeting of the council, Finance Minister Arun Jaitley said all taxpayers excluding a few exceptions like composition dealers shall file one monthly GST return in place of multiple filings currently required in a month.
Return filing dates shall be staggered based on the turnover of the registered person to manage load on the IT system. Composition dealers and dealers having nil transaction shall have facility to file quarterly return.
Finance Secretary Hasmukh Adhia said the monthly return filing system will come into force in six months and the present system of filing of return through GSTR 3B and GSTR 1 forms would continue for not more than six months.
The Council, at its 27th meeting, also referred the issue of incentivising digital payments to a group of state finance ministers after some states wanted a negative list.
Most member states on the panel were agreeable to the proposal of giving a concession of 2 per cent in GST rate (where the tax rate is 3 per cent or more) on business-to-consumer (B2C) supplies, for which payment is made through cheque or digital mode, subject to a ceiling of Rs 100 per transaction, so as to incentivise promotion of digital payments.
But since some states wanted a small negative list, the issue will be referred to a five-member group of state finance ministers, Jaitley said.
A separate group of ministers would go into the issue of levy of cess on sugar and reduction of GST on ethanol.
While the cost of sugar production is over Rs 35 per kg, the market price is around Rs 26-28 a kg, he said, adding cane growers are in deep distress and a proposal to levy a cess was made to help them.
“Now since this (suggestion has been made) after the GST has been implemented,” he said, referring to GST roll-out from July 1 last year where a cess on top of GST rate was imposed only on luxury and demerit goods like cigarettes and high-end cars to make up a kitty to compensate states for their losses due to implementation of the new tax regime.
Collections from a similar cess on sugar could be used for helping farmers, it was proposed.
“How are such contingencies to be addressed in the GST regime, are they to be addressed by imposition of cess or are they to be addressed by temporarily increasing the tax or by some alternative method of revenue raising,” Jaitley said referring to discussion at the council meeting.
The group of ministers would make a recommendation to the council on the avenues for raising revenue to meet contingencies of this kind where the cost of commodity is much higher than its selling price, he said.
Tax experts, however, believe that such a cess should be against the intention of doing away with cesses in GST regime.
On converting GST Network (GSTN), the IT backbone of the new indirect tax regime, into a 100 per cent Government-owned company, Jaitley said it was agreed that the 51 per cent equity held by private entities should be taken over by the government and “eventually the Central Government will hold 50 per cent and state Governments (together) will hold 50 per cent”.
He said the collective share of state Governments will be pro rata, divided among states in accordance with their GST ratios.
“While doing so the council also recommended that the GSTN will continue to employ people contractually and have the flexibility to get the best talent from the market considering the wide range of activities and the responsibilities of GSTN itself,” Jaitley said.
The GSTN currently is 24.5 per cent owned by the Central Government and a similar percentage is held by state Governments collectively. The remaining 51 per cent is with five private financial institutions — HDFC Ltd, HDFC Bank Ltd, ICICI Bank Ltd, NSE Strategic Investment Co and LIC Housing Finance Ltd.
A three phase transition to a simplified return regime — a phased manner with GSTR1 and GSTR 3B continuing for six months, single return with possibility of provisional credit for another six months and only a single return with credits of only invoices uploaded by supplier thereafter — would enable adequate bandwidth for both businesses and the GSTN. (PTI)