India: GST Council extends date for filing annual returns and reconciliation statement, introduces measures to address consequences for non-filing of returns and fraudulent ITC

The major decisions* taken by the GST Council in its thirty eighth meeting1 are summarised below.

Annual returns and GST Audit
Due date to file Annual Return (Form GSTR-9) and Reconciliation Statement (Form GSTR-9C) for financial year (FY) 2017-18 has been extended to 31 January 2020.

Rate changes

  • Exemption introduced from 1 January 2020 for long-term lease by an entity having ownership of at least 20% by Central/ State Government, on industrial/ financial infrastructure plots, to the current exemption available to entities having ownership of 50% or more by Central or State Government.
  • A single rate of GST at 28% on State-run and State-authorised lottery to be made effective from 1 March 2020.

Compliance

  • Late fee payable by taxpayers for pending returns in Form GSTR-1 from July 2017 to November 2019 has been waived, provided such returns in Form GSTR-1 are filed by 10 January 2020.
  • Issuance of E-way Bill to be blocked for taxpayers who have not filed returns in Form GSTR-1 for two consecutive tax periods.
  • Input tax credit (ITC) for invoices or debit notes that are not reflected in Form GSTR-2A to be restricted to 10% of the eligible credit available on invoices or debit notes reflected in Form GSTR-2A of the recipient.
  • Measures to block fraudulently taken ITC will be introduced.
  • Introduction of a standard operating procedure for Tax Officers on actions to be taken in case of non-filing of returns.
  • Due date of filing GST returns for the month of November 2019 to be extended for North Eastern States.

Others

  • Grievance Redressal Committees to be constituted at Zonal/ State level, to address the grievances of taxpayers. The Committees will include officers from both Central and State revenue authorities, representatives of trade and industry and other stakeholders.
  • The Council also approved various statutory amendments, which will be introduced in the Budget session for FY 2020-21.

PwC Comments

In view of the upcoming Budget session for FY 2020-2021, the GST Council has not proposed any major changes in this GST Council Meeting and refrained from introducing broad ranging rate hikes. The GST Council has emphasised on measures to be introduced to restrict loss of revenue as a result of ITC availed on fake invoice and non-filing of returns. It appears that a further restriction from the current 20% to 10% of the eligible credit of the invoices reported in Form GSTR-2A is intended to be brought into effect.

The exemption to long-term lease for entities with lower Government ownership is welcome, and it should positively benefit various industrial parks, including solar parks. It will be interesting to understand how the Government will seek to garner revenues without increasing GST rates.

*Note that the GST Council has proposed the above changes and they would be brought into effect by issuance of notifications. In addition, the proposed statutory changes are yet to be made public.

1 Press Release ID nos. 1596894, 1596895 and 1596896

For further information please contact: pwctrs.knowledgemanagement@in.pwc.com

Image Source: Unsplash.com

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