Outcome of the 42nd GST Council Meeting held on 5th October, 2020

GST Council held its 42nd meeting on 5th October, 2020 through video conferencing. In the meeting, GST Council has broadly taken the following decisions –
Key recommendation of the GST Council are:
1. It has been proposed to further simplify return filing and reduce the taxpayer’s compliance burden such that the timely furnishing of details of outward supplies (GSTR-1) by a taxpayer and his suppliers would –
(i) allow him to view the ITC available in his electronic credit ledger from all sources i.e. domestic supplies, imports and payments on reverse charge etc. prior to the due date for payment of tax, and
(ii) enable the system to auto-populate return (GSTR-3B) through the data filed by the taxpayer and all his suppliers.

2. Due date of furnishing GSTR-1 by quarterly taxpayers to be revised to 13th of the month succeeding the quarter from 1st January, 2021.

3. Roadmap for auto-generation of GSTR-3B from GSTR-1 has been recommended which are as follows:
i. Auto-population of liability from own GSTR-1 from 1st January, 2021;
ii. Auto-population of input tax credit (ITC) from suppliers’ GSTR-1 through the newly developed facility in FORM GSTR-2B for monthly filers from 1st January, 2021 and for quarterly filers from 1st April, 2021

4. In order to ensure auto population of ITC and liability in GSTR 3B as detailed above, FORM GSTR 1 would be mandatorily required to be filed before FORM GSTR-3B from 1st April, 2021.

5. The present GSTR-1 and GSTR-3B return filing system to be extended till 31st March, 2021 and the GST laws to be amended to make the Form GSTR-1 and Form GSTR-3B return filing system as the default return filing system.

6. In order to reducing the compliance burden particularly on the small taxpayers having aggregate annual turnover of less than INR 5 crore, the Council’s earlier recommendation of allowing filing of returns on a quarterly basis with monthly payments by such taxpayers to be implemented from 1st January, 2021. Such quarterly taxpayers would, for the first two months of the quarter, have an option to pay 35% of the net cash tax liability of the last quarter using an auto generated challan.

7. Revised requirement of declaring HSN for goods and SAC for services in invoices and in FORM GSTR-1 from 1st April, 2021 shall be as under:
a) HSN/SAC at 6 digits for supplies of both goods and services for taxpayers with aggregate annual turnover above Rs. 5 crores;
b) HSN/SAC at 4 digits for B2B supplies of both goods and services for taxpayers with aggregate annual turnover upto Rs. 5 crores;
c) Government to have power to notify 8 digit HSN on notified class of supplies by all taxpayers.
8. Furnishing of Nil FORM CMP-08 through SMS has been recommended.
9. Refund to be paid/disbursed in a validated bank account linked with the PAN and Aadhaar of the registrant from 1st January, 2021.
10. To encourage domestic launching of satellites particularly by young start-ups, the satellite launch services supplied by ISRO, Antrix Corporation Ltd. and NSIL would be exempted.
11. It has been proposed to extend the levy of compensation Cess beyond the transition period of five years i.e. beyond June, 2022, for such period as may be required to meet the revenue gap.

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