10 Expectations from 40th GST Council Meeting to be held on 12 June 2020
The GST Council meeting is scheduled to be held on 12th of June, 2020. This 40th GST Council meet will be headed by Finance Minister Nirmala Sitharaman and will comprise of state counterparts. This meeting will be held by video conferencing considering the COVID 19 backdrop and is likely conducted to discuss the impact of COVID 19 on tax revenues and to provide further relief to taxpayers
Here are top 10 things that are expected from this meeting:
1) The COVID 19 pandemic has left severely disrupted the economy. This has led to a fall in the GST revenue also. Remedies to mitigate the revenue gap caused due to the pandemic are expected to be discussed.
2) Aid in the form of reduction of GST rates for certain sectors such as Real Estate, Hospitality, Airlines etc is hoped for.
3) Relaxations in the GST return filing timelines, registration timelines etc are hoped for. The compliance burden though deferred till 30th June 2020 needs simplification in long term considering the impact of the pandemic on economy will be long term. The revise due dates are expected to be 31 July 2020.
4) Extension in the payment of interest rates and late filing fees in order to support the ailing sectors, till July 2020
5) Under GST law, the states were to be compensated for any loss of revenue in the first 5 years of implementing GST. The shortfall is calculated assuming a 14% annual growth in GST collections by states over the base year of 2015-16. Under the GST structure, on top of the highest tax slab, a cess is levied on luxury, sin and demerit goods and the proceeds from the same are used to compensate states for any revenue loss. Course of action to accumulate funds to compensate states for revenue loss for GST implementation is to be looked into. In the previous council meeting, the Finance Minister had said that she would look into the legality of GST council borrowing from the market to meet compensation requirements.
6) The pending dues of the state’s pertaining to the above compensation are expected to be looked into and it is hoped that the same will be released in phases. This will provide immense relief to the respective states.
7) Waiver of late fees for non-filing of GST returns for the period August 2017 to January 2020 is also expected to be discussed. The government has already waived late fee for any delay in filing GSTR-3B from February to June, 2020 to reduce compliance burden for small businesses having turnover less than ₹5 crore amid the covid-19 crisis. “The current requests for waiver of late fee pertain to the old period (August 2017 to January 2020)
8) Emphasis on further working capital relief to businesses is expected by deferring the tax payment and removing restrictions on availment of ITC for a temporary period of time with a proper system of reconciliation.
9) All the essentials like fruits, vegetables, packed food items, bakery, dairy, tea, coffee, health supplement’s, medical equipment’s to be taxed at a lower rate. The industry should be allowed refund which will assist in bringing the prices of these essential items down and make them affordable to public.
10) Focus on measures to help boost demand like rate reduction, compensation cess holiday on certain goods will go a long way in reducing prices thus boosting demands of consumers in an economy where demand is falling.
Struggling with the adverse impact of COVID-19 lockdown on the economy, GST collections have been showing declining trends and the government has been aware of this fact. Even economy as a whole is not in a healthy position. Measures decided by the GST council will go a long way in boosting the economy as well as the GST collection