In a breather to tax assessees apprehensive about the burden of compliance under the Goods and Services Tax (GST) regime, the GST Council on Sunday decided to relax the deadline for filing of returns for the first two months following GST’s rollout.
“The official launch of the GST will take place on the midnight of June 30 and July 1 at a function which will be organised in Delhi,” Finance Minister Arun Jaitley said after the seventeenth GST Council meeting. There was no “luxury of time to defer the implementation” of GST, he said.
The formal transition to the indirect tax regime, billed as the biggest reform of its kind in independent India, is likely to take place in Parliament at midnight on June 30.
As per the revised timeline for filing returns, the GST Return-1 (GSTR-1), which reflects sale invoice details, can now be filed by September 5, instead of the earlier deadline of August 10. For August, the new deadline for GSTR-1 will be September 20, instead of September 10.
“To obviate any grievance or any lack of preparedness, a slight relaxation of time for the first two months, that is, returns for the months of July and August, was discussed, and from September, the strict adherence to the time will go on,” Jaitley said. “That means after relaxation, those who are not ready will have two and a half months to get ready. If somebody still says he is not ready then it is to his own detriment.”
The Council has decided to provide relief to hotels by raising the threshold tariff for the 28 per cent tax rate to Rs 7,500 from the Rs 5,000 proposed earlier. “After a lot of discussion (it was decided) that 28 per cent limit in hotels will start from Rs 7,500 which means that between Rs 2,500 and Rs 7500, the rate will be 18 per cent. It will be 28 per cent beyond Rs 7,500. Similarly, tax GST on restaurants in these hotels will be at par with other air conditioned restaurants which is 18 per cent,” Jaitley said.
The Council also fixed the GST rate for state-run lottery at 12 per cent of face value. State-authorised lotteries will be taxed at 28 per cent of face value, Jaitley said. As per official estimates, states currently collect about Rs 450 crore annually as lottery tax; the approximate turnover (face value) of the lottery trade is Rs 59,621 crore.
The Council cleared six draft rules relating to advance ruling, appeal and revision, assessment, anti-profiteering and funds settlement. The anti-profiteering provision, Jaitley said, was meant to be a deterrent. “I hope we are not compelled to use it,” he said.The Council decided to put a two-year sunset clause for the anti-profiteering provision, Revenue Secretary Hasmukh Adhia said.
A three-tier structure will ensure compliance with the anti-profiteering clause. The GST implementation committee, consisting of four state government officials, four central government officials, and one GST Council member, will function as the standing committee to look into anti-profiteering complaints. The complaints will then be referred to DG (Safeguards), which will function as the investigative authority. The final decision will be taken by a five-member committee with a retired Secretary as its chairman.
The rules for e-way bill, however, are still under consideration of the GST Council, and are likely to be taken up in subsequent meetings, implying that it won’t be in place from July 1. “…It was decided that further deliberation will continue and till then, an alternate rule will operate to authorise the existing system to continue,” Jaitley said.
The Council also decided the threshold limit for the composition scheme for special category states. Jaitley said that barring Uttarakhand, which has opted for a Rs 75 lakh threshold for the composition scheme, and Jammu & Kashmir, the Rs 50 lakh threshold will continue for all other special category states.
In the previous GST Council meeting, the threshold for the composition scheme was raised to Rs 75 lakh from the earlier decided level of Rs 50 lakh for other states, and the decision on special category states had been kept pending.
The composition scheme, with a flat 1 per cent tax rate for traders, 2 per cent for manufacturers and 5 per cent for restaurants with a cut-off of annual turnover of up to Rs 50 lakh, provides for an easier method of calculating tax liability for registered dealers with turnover below the compounding cut-off, to reduce the administrative costs of collecting tax from small traders. However, those who opt for the scheme will not be eligible for input tax credit.
On the registration of businesses, Jaitley said that 65.6 lakh, or 81.1 per cent, of the existing 80.91 lakh excise, service tax and VAT assessees, have migrated to the GST Network. Registration, which closed on June 15, will reopen on June 25, and the process has been going on “satisfactorily”, he said. “Businesses should not rush for migration. The provisional ID number will be the same for GSTIN (GST identification number). New businesses too need not rush. They will have 30 days for GSTIN.”
Tax analysts welcomed the relief on return-filing deadlines. “The announcement of an extended timeline for filing returns for July and August is a welcome development. However, this should not make businesses complacent, as the additional time available is very limited. Also, several issues relating to real-life problems raised by business to the sectoral committees are yet to be decided upon, and may not now see the light of day before GST’s rollout,” M S Mani, senior director at Deloitte Haskins & Sells LLP, said.