37th GST Council Meeting Highlights, Updates, Outcome, and More

On September 20, 2019, the GST Council met in Panaji amidst industry demands for rate reductions.

The 37th GST Council meeting, which was chaired by Union Finance Minister Nirmala Sitharaman and included delegates from all states and union territories (UTs), took place in Goa against the backdrop of slowing economic growth, which for the first quarter of the current fiscal year fell to a six-year low of 5%.

The purpose of the meeting was to decide on tax moderation while taking the state of the revenue and the need to accelerate the slowing economy into account.

Due to the economic slowdown, demands have been made by several sectors, including hotels, FMCG, cars, and biscuits, to lower GST rates.

Let’s have a look at the main topics and industries covered and discussed at the 37th GST Council meeting, which took place on September 20, 2019, in Panaji, Goa.

Expectations from the 37th GST Council Meeting 

1. GSTR-9 Simplification

GSTR-9, 9A, and 9C were initially due on December 31, 2018. The most recent extension date is November 30, 2019, and it has been extended four times. At the time of the third extension of the due date, only 15% of taxpayers had submitted their annual returns. This highlighted the difficulties in filing the annual return.

Professionals and taxpayers encounter difficulties, among other things, when filing HSN summaries of purchases, splitting the Input Tax Credit (ITC) between goods and services, splitting the ITC for expenses, and reconciling with books of accounts. When comparing GSTR-3B to GSTR-1, it was discovered that the compliance level was nearly twice as high. This demonstrates that consumers are searching for a summary return, such as the GSTR-3B, that is more straightforward. Companies hope that rather than allowing for an extension of the due date, the government will prioritize simplifying GSTR-9. At the next Council meeting, the government might think about doing away with some less important disclosure requirements.

As an alternative, it might substitute an easily comprehensible summarized return for the current one. Additionally, it is anticipated that the Council will decide whether to exempt small taxpayers from the annual return compliance requirement for the fiscal year 2017–18.

2. Postponement of New Return Filing Systems Implementation

In October 2019, the new return filing system will go into effect. In order to give taxpayers and professionals a preview of how the new return system operates, the government provided prototype returns. However, not all of the features are activated under these prototype returns.

Compared to the current system, the new return filing system requires reporting of additional information. The taxpayers require enough time to implement an appropriate system for managing their invoices and bookkeeping that satisfies the new system’s disclosure requirements. To ensure a smooth launch, the Council may decide to postpone the new return system.

3. Council May Concentrate on the Auto Sector-Related GST Rate Reductions

The automobile sector is requesting that the current 28% GST rate be reduced to 18%. The government is aware of the issues faced by the auto industry, the Finance Minister has reassured. FM also mentioned that the upcoming Council meeting will address issues pertaining to the auto industry.

At the last GST Council meeting, the 12% GST rate on electric cars was lowered to 5%. It is anticipated that at the upcoming Council meeting, a definitive decision regarding GST rate reductions for the automotive sector will be made.

4. Council May Examine How ITC is Handled in the Healthcare Industry 

Many hospitals have reported an 8% decrease in their annual profit margins as a result of the elimination of the Input Tax Credit (ITC) benefit. Currently, all other healthcare services are free from GST fees, with the exception of hair transplants, implants, and cosmetic surgery.

The cost of inward supplies is rising since ITC cannot be claimed on them. As a result, the providers of healthcare services are now pushing for a 5% output GST on these taxable services in the absence of ITC. It is highly probable that the Council will delve deeper into this conversation at the next GST Council meeting.

Also Read: The importance of accurate ITC reporting

Key Agendas of the 37th GST Council Meeting

1. Orders from the Central Government 

Deemed approval by the GST Council of the Central Government’s notifications, circulars, and orders. 

2. Decisions taken by GIC 

The GST Implementation Committee’s (GIC) decisions for the Council’s information. 

3. The Revenue Position 

The Council is likely to review the revenue position to know the actual GST revenue collections and take steps in order to avoid tax evasion. 

4. Decisions Taken By the IT Grievance Redressal Committee

IT Grievance Redressal Committee Decisions and Recommendations for Council Information.

5. Law Committee Recommendations

Matters that the Law Committee suggests the GST Council take into consideration in the 37th GST Council Meeting;

• Request to extend the deadline for appealing decisions made by the Appellate Authority before the GST Appellate Tribunal on the grounds that the Appellate Tribunal’s benches are not constitutional.

• Small taxpayers’ exemption from filing an annual return.

• Questions about how to interpret Section 10 of the IGST Act, 2017.

• Limitations on obtaining input tax credits for external supplies that are not provided in accordance with section 37 of the CGST Act, 2017.

• Suggested explanations for matters pertaining to refunds.

• E-way bill for gold transportation.

• A proposed change to FORM GSTR-3B-related sub-rule (5) of rule 61 of the CGST Rules, 2017.

• Determining the deadline for submitting a return in Form GSTR-3B and outward supply information in Form GSTR-1 for the months of October through December of 2019.

• A proposal to modify the 2017 CGST Rules

6. Fitment Committee Recommendations

The Fitment Committee suggested a few matters that the GST Council should take into account. 

7. Status of the Implementation of Following Matters 

• Updates on the GST EWB System’s implementation—FASTag Integration.

• The Council is going to seek an update on the New Return System’s implementation.

• The integrated refund system’s status with a single authority handling payouts.

• The state and direction of the electronic invoice generation process.

• Connecting Aadhar registration to GST registration and suggesting modifications to the GST Law and GSTN System

• A report on the Goods and Services Tax Network (GSTN) change in ownership and share capital, as well as the transfer of shares from the Empowered Committee of State Finance Ministers (EC) and non-governmental organizations to the federal government, state governments, and union territories.

8. GoM’s Meeting 

Group of Ministers (GoM) 11th Meeting Minutes on IT Challenges in GST Implementation for Council Information and Discussion on GSTN Issues. 

9. NAA’s Quarterly Report

For the benefit of the GST Council, the NAA’s quarterly report would cover the period from April to June 2019. 

10. GST Appellate Tribunals 

Establishment of the Goods and Services Tax Appellate Tribunal’s State and Area Benches (GSTAT). 

11. Modifications to the GST Laws 

Modifications to the GST Laws in light of the establishment of Jammu and Kashmir and Ladakh as UTs. 

12. Special Composition Scheme

Special Composition Scheme for Menthol, Sand Mining Activities, Stone Crushers, and Brick Kilns. 

13. Payment Status for Advance User Charges

The States’ and CIBC’s Payment Status for Advance User Charges, along with Interest on Delayed Payment. 

Highlights of the 37th GST Council Meeting 

At the end of the meeting, a number of decisions were made, including easing the filing of annual returns, revising rates, delaying the filing of new GST returns, altering the composition scheme, creating new GST exemptions, and providing the following clarifications. 

1. Revision of GST Rates

The GST Council changed the rates that apply to the following products and services:

2. Compensation Cess for Vehicles

The GST compensation cess on motor vehicles that can accommodate 10–13 people has been lowered by the 37th GST Council. Manufacturers and dealers of automobiles will now have to charge the following:

Cess on gasoline-powered vehicles with 10–13 seats: 1% (down from 15% previously).

Cess on Diesel Motor Vehicles with Ten to Thirteen Seats: 3% (Down from 15% Previously). 

3. Reduced GST Rates on Hotel Tariffs

The GST council has decided to lower the following hotel tariff GST rates.

Room rate for stays exceeding Rs. 7,500: 18% (previously 28%). 

From Rs. 1000 to Rs. 7500, the room rate is 12% (previously 18%).

Rates for rooms up to Rs. 1000: nil. 

4. Easy GST Returns

The new GST return filing system under the simplified GST regime will now be introduced with the upcoming financial year, or from April 2020, instead of the planned phased implementation that began in October 2019. As a result, until March 2020, taxpayers must continue filing their GSTR 1 and GSTR 3B.

Additionally, a proposed restriction on the ability of entities that do not file GSTR 1 to claim ITC will be applied in an effort to increase compliance with the filing of GSTR 1 (outward supplies).

Also Read: How To Check GST Return Status?

5. GST Exemptions

The service industries listed below are exempted from GST.

Warehousing: The provision of storage facilities for the exempt storage of agricultural products, such as cereals, pulses, coffee, tea, etc.

Transportation: Until September 30, 2020, export freight shipped by air or sea is exempt from GST for an additional year.

Insurance: The crop insurance program of “BANGLA SHASYA BIMA” (BSB) is not applicable under GST.

Export: Exemption for services rendered by an intermediary to a recipient or supplier of goods when neither party is based within the taxable area.

6. Other Important Highlights

For export freight transported by air or sea, the conditional GST exemption’s validity period has been extended by one year, through September 30, 2020.

The tax status of fishmeal From July 1, 2017, to September 30, 2019, all cases are exempt, with the exception of those in which tax has already been collected.

From July 1, 2017, to December 31, 2018, pulleys, wheels, and other items under HSN 8483 used as agricultural machinery are subject to a 12% tax.

Option to pay GST at the rate of 18% on transaction value when disposing of specific goods for petroleum operations (where 5% concessional GST was paid at the time of original supply); this is subject to the condition that the goods are certified as non-serviceable by the Director General of Hydrocarbons (DGH).

Outcomes of the 37th GST Council Meeting 

The announcement by the Finance Minister to reduce the corporate tax rate from 30% to 25.17% resulted in a significant increase in the value of Indian stocks. Prior to the start of the 37th GST Council meeting on September 20, 2019, the finance minister addressed a number of additional changes and reforms. With economic growth in the first quarter of the current fiscal year falling to 5%, a six-year low, these reforms are expected to provide the economy a much-needed boost. Here are a few more notable outcomes of the 37th GST Council Meeting apart from the revision of GST rates and exemptions.

• For composition taxpayers, the filing of annual returns (FORM GSTR-9A) is waived for the fiscal years 2017–18 and 2018–19.

• For taxpayers with an aggregate turnover of up to ₹ 2 crores for the fiscal years 2017–18 and 2018–19, filing FORM GSTR-9 is optional.

• To examine the simplification of the annual return and reconciliation statement forms, an officers’ committee will be established.

• Input tax credit (ITC) availability will be limited unless the relevant supplier files the GSTR-1, which contains information about outbound supplies.

• Due to the Appellate Tribunals’ lack of functionality, the deadline for submitting appeals before the GST Appellate Tribunal will be extended.

• A new system for GST returns will be implemented starting in April 2020; it was first suggested in October 2019.

• On June 28, 2019, Circular No. 105/24/2019-GST was released regarding the return of post-sale discounts.

• Appropriate modifications to the relevant sections of the SGST, UTGST, and CGST Acts in light of the establishment of the UTs of Jammu & Kashmir and Ladakh.

• Starting on September 24, 2019, an integrated refund system will be implemented, with payments being made by a single authority.

• Aadhaar may eventually be required in order to register as a taxpayer under GST and to make refund claims.

• Fair limitations have been placed on credit transfers from high-risk taxpayers, including the recent ones.

Also Read:

36th GST Council Meeting Highlights, Updates, Outcome, and More

GST Audit: When and How GST Audits Are Conducted and What Businesses Need To Prepare

More Information

You can get more information on 37th GST Council meeting on 37th GST Council Meeting | Goods and Services Tax Council and gstcouncil.gov.in/sites/default/files/Minutes/Signed Minutes – 37th GST Council Meeting.pdf

Aaryan Singh

B.Com degree with finance and accounting Specialisation in Goods and Service Tax (GST) and taxation system Completed certification course on GST from ICAI in 2022 Online GST practitioner course completed in 2023 from Indian Institute of Skill Development and Training.

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