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GST Updates - 27th Meeting

The 27th meeting of Goods and Service Tax(‘GST’) Council took place at New Delhi on Friday, 04th May, 2018. The GST Council has recommended significant measures in order to attenuate the concerns of the taxpayers pertaining to return filing glitches and claiming of input in the returns. An epitome of these decisions along with certain recommendations are as follows:


  1. Simplification of the GST Return

On the recommendations of the Group of Ministers on IT Simplification, the council has approved the principles for filing of new return design. The crucial elements of the new return design are as follows: -

  • One monthly return shall be filed by all the taxpayers excluding a few exceptions like composition dealer.


  • Composition dealers and dealers having nil return shall have the facility to file quarterly return.


  • Elimination of GSTR-2 and there shall be no need to upload the purchase invoices hence, invoices uploaded by the seller would be the valid document to avail input tax credit by the buyer.


  • There will be three phases of transition. In the 1st phase, GSTR 1 and GSTR 3B shall continue up to 6 months. New single return will go live after 6 months.


  • In the 2nd transition phase of next 6 months, the new return will have facility to upload invoice wise detail and input tax credit on self-declaration basis as in current GSTR 3B.


  • The GSTN will show the buyer invoices uploaded by the seller and thus buyer will check the gap between credit available to them as per invoices uploaded by their sellers and the provisional credit being claimed by them.


  • In the 3rd phase, after 6 months of phase 2, the input tax credit will be limited to the invoices uploaded by the sellers from whom the goods or services are received, and the facility of provisional credit will get withdrawn.


  • The input tax credit and output tax liability will be calculated automatically by the system based on invoices uploaded by the sellers. Simple return design and easy IT interface will be given to the taxpayers.


  • No automatic reversal of input tax credit from buyer in case seller does not pay the taxes and recovery shall also be made from the seller only except some cases like missing dealer, closure of business by supplier or supplier not having adequate assets etc.


  • An online and automated process for the recovery of tax or reversal of input tax credit through the issue of notices and orders, in order to reduce the human interface.


  • To control the misuse of input tax credit facility, the seller (who has defaulted in payment of tax) unloading the invoices in order to pass input tax credit above a threshold limit shall be blocked. Newly registered dealers shall also be covered under the similar safeguards.


  • The content or information required to be filled in the return shall also be reduced.


  1. Changes in GST Rate


  1. Incentive to promote Digital transactions: In order to promote the cashless economy, the Council has proposed a concession of 2% (where the GST rate is 3% or more, 1% each for CGST and SGST) on B2C supplies, for which the payment is made through digital mode or cheque, subject to limit of Rs. 100 per transaction.


  1. Imposition of Sugar Cess over and above 5% GST and reduction in GST rate on ethanol: The council has also proposed to look into the issue of imposition of sugar cess and reduction in GST rate on ethanol in detail at further meetings.


  1. Changes in Shareholding Pattern of GST Network


  1. The GSTN will be now be a fully owned government company with the Central Government and State Government holding 50% equity shares each.
  2. Presently 51% equity shares are held by non-Governmental institutions and through various mechanisms, GSTN is under strategic control of government.