43rd GST Council Meeting Highlights, Updates, Outcome, and More

On May 28, 2021, the 43rd GST Council meeting took place. After more than half a year, the GST Council convened. The meeting was presided over by Smt. Nirmala Sitharaman, the Union Minister of Finance.

Other attendees included the Finance Ministers of the states and union territories (UTs), as well as senior officers from the Ministry of Finance and the states and UTs. The Union Minister of State for Finance and Corporate Affairs, Shri Anurag Thakur, was also present to be a part of the meeting.

The last GST Council Meeting was held on October 5th, 2020. It was decided that the compensation cess levy shall be extended beyond the 5-year transition period as any amount of time that may be necessary to close the revenue gap. Also, the shortfall amount in the borrowing options of INR 97,000 crores shall be increased to INR 1 lakhs and 10 crores. 

The Proposal

An exemption of GST has been demanded from the government on medical equipment and products like gloves, face masks, hand sanitizers, PPE kits, and temperature scanners.

The Key Agendas of the 43rd GST Council Meeting

1. Ad-hoc Exemptions

Orders issued pursuant to the Customs Act, 1962, Section 25(2), shall be presented to the GST Council.

2. Second IGST Settlement

Status of Group of Ministers on second IGST settlement. 

3. Concerns Pertaining to the GSTN 

• In order to approve the extension of Projects REAP, LEAP, and BIFA until March 31, 2022, on a time and material basis, the chairman may reduce Manpower.  
• Approved in principle to broaden the scope of the IRP project in order to include e-invoice registration, issue IRNs, lower the turnover threshold, and accommodate multiple IRPs if necessary. 
• Proposal to approve deputation guidelines and ask the States to supply the GSTN with experienced personnel with SGST.
• Update on the status of the conversion of the Goods and Services Tax Network (GSTN) into a fully government-owned company and the transfer of shareholding to the States.
• Status of Payment by the States and Waiver of Interest on delayed receipt of Advance User Charges (AUC) from a few states and CBIC.

4. Recommendations by the Law Committee 

• The Law Committee has recommended certain issues for the GST Council to consider, including the rationalization of the late fee levied under section 47 of the CGST Act. 
• Proposal to amend the CGST Act, 2017’s return-related provisions.

5. GST Regulation and Process

Reduction of Late Fee for FORM GSTR-3B for July 2017 to April 2021 calendar months Amnesty to clear up outstanding returns under the GST system. 

6. Amendments

• Notifying the Finance Act of 2021’s Section 112 regarding the CGST Act’s Section 50 Amendment.
• Proposal to change the name of the program from quarterly return and monthly payment (QRMP) to quarterly return and quarterly payment (QRQP).

7. COVID Cess 

Seeking concurrence for levy of COVID-19 cess on the power and pharmaceutical sector.

8. Fitment Committee Recommendations 

Issues recommended by the Fitment Committee for the consideration of the GST Council.

9. Imposition of GST on Extra Neutral Alcohol

Applying the Goods and Services Tax to Extra Neutral Alcohol (ENA) and Increasing GST Revenue. 

10. Recommendations by the IT Grievance Redressal Committee

Decisions and recommendations made by the 14th IT Grievance Redressal Committee, as well as an agenda for the council’s decision. 

11. State Revenue

Examining the state of revenue under the goods and services tax. 

12. Problems Pertaining to GST Compensation Cess 

Proposal to undertake problems related to GST Compensation Cess. 

Highlights of the 43rd GST Council Meeting 

At the 43rd GST Council meeting on May 28, 2021, the Finance Minister made the decision to exempt some COVID-19 relief materials and some medications for particular diseases. Justification of late fees through limiting the maximum amount and extending the deadlines, along with elucidation of the annual return and reconciliation statement. The major highlights of the meeting are as follows:

1. Exemption on Import of Particular Medications 

Till August 31, 2021, imports of COVID-related relief supplies and anti-black fungus medications are exempt from IGST, even if they are bought or intended for donation to the government or any relief organization at the recommendation of state authorities.

A Group of Ministers (GoM) has to be established to determine new exemption rates and assess the need for additional reductions. The GOM must submit its report by June 8, 2021. 

2. Reduction of GST Rates on a Few Goods and Services 

The GST rate on a number of goods and services was changed, and clarifications were given regarding things like government-sponsored midday meals, medicine rate reductions, education board fee exemptions, and more. 

3. Amnesty for Taxpayers 

It is advised that an amnesty program be implemented to relieve taxpayers of the burden of paying late fees for unfiled returns. The maximum amount of late fees is INR 500 (INR 250 CGST and SGST each) for taxpayers with no liability, and INR 1,000 (INR 500 CGST and SGST each) for all other taxpayers per return.

4.  Rationalization of Late Fee  

Rationalization of late fees to reduce the burden on small taxpayers was discussed in the 43rd GST Council.

5. Relaxations to the Taxpayers 

The following additional relaxations are being given to the taxpayers:

6. Amendments for Interest Payment 

Retrospective amendment to section 50 of the CGST Act, requiring notice as soon as possible and allowing for interest to be paid on a net cash basis as of July 1, 2017. 

7. Return Filing System

To make the current GSTR-1/3B return filing system the default return filing system in GST, the GST Council proposed amending a few sections of the Act. 

43rd GST Council Meeting Outcomes 

• Extension of the GSTR-1/IFF filing deadline by fifteen days for the month of May 2021.

• GSTR-4 filing deadline for FY 2020–21 extended to July 31, 2021.

• The deadline for submitting ITC-04 for QE March 2021 has been extended to June 30, 2021.

• Cumulative use of rule 36(4) in the tax return for the months of April, May, and June of 2021 in order to claim ITC.

• Permitting businesses to file their returns by August 31, 2021, using the Electronic Verification Code (EVC) rather than the Digital Signature Certificate (DSC).

• Subject to certain exceptions, the deadline for completing various actions under the GST Act by any authority or by any person falls between April 15, 2021, and June 29, 2021. However, it may be extended until June 30, 2021.

Also Read:

GSTR-4 Due Date And Filing: A Complete Guide

GSTR 1 Details: Everything You Need to Know

What is Expected From the 43rd GST Council Meeting?

1. Additional Relief Initiatives Due to the COVID-19 Pandemic

The state governments have made several appeals to the GST Council to lower the GST rates on a range of necessary medical supplies to combat COVID-19, including patient treatment.

The state governments have made many petitions to the GST Council to lower the GST rates on a range of necessary medical supplies to combat COVID-19, including patient treatment.

Regarding the GST on vaccines, the GST Council’s Fitment Committee has recommended against removing the current 5% GST exemption for COVID-19 vaccines. The Fitment Panel has maintained that the Centre and the states will eventually bear the GST because vaccinations were nearly entirely purchased by the federal and state governments and given to the general public at no cost.

Considering the severity of the pandemic, a life-saving action, and a negligible financial loss, the Council may decide to accept the ruling and increase the benefit.

2. Scheme of Amnesty for Small Taxpayers under GST

In light of the pandemic, the Council is expected to propose an amnesty program on late fees for filing GST returns, which will greatly assist small taxpayers and MSMEs across the nation. All of the outstanding GSTR-3B returns from July 2017 through April 2021 are likely to be covered under the program. Moreover, this amnesty program may be in effect from June 1, 2021, to August 31, 2021.

3. Rationalization of GST Rate for Particular Items

The Council might talk about lowering the 28% GST rate that presently applies to two-wheelers. It is anticipated to increase income that the epidemic had an adverse effect on. Any rate cut would help two-wheeler manufacturers expand sales through competitive pricing, as indicated by higher tractor sales, which indicate a surge in rural demand.

The subject of charging GST on natural gas may also be brought up by the GST Council.

In addition, sources informed IANS that a three-tier GST structure that bases costs on use might include natural gas. Consequently, the taxation on residential piped natural gas (PNG) might be lowered to 5%, whilst commercial PNG might be subject to a median rate of 18%. Additionally, automotive fuel CNG might be subject to a higher tax rate of 18%.

In addition, it has been informed to the IANS that a three-tier GST structure that bases costs on use might include natural gas. Therefore, the taxation of piped natural gas (PNG) for residential use may be lower at 5%, while the taxation of PNG for commercial use may be higher at an average rate of 18% and the taxation of CNG for automobile fuel may be higher at a maximum rate of 28%.

4. Resolving the Problems Arise from the Inverted Tax Structure

Particularly in industries like fertilizer, steel kitchenware, solar panels, tractors, tires, electrical transformers, pharmaceuticals, textile, cloth, and railroad locomotives, an inverted tax structure rectification is required.

When input and capital items have higher tax rates than completed commodities, this is referred to as an “inverted tax.” This results in an increase in the blocking of product input credit claims in addition to a host of other administrative and legal problems.

Although there is currently a 10% tariff on imported tires, there is a 20% charge on the inputs, such as rubber. In contrast, solar modules are duty-free; however, the components they are made of are subject to a 5–10% tax.

5. Rework the Necessity for Borrowing and the Compensation Gap

To reevaluate the compensation gap and borrowing need, a number of states have requested the Union Finance Minister, Nirmala Sitharaman, to convene a meeting of the GST Council with as little delay as feasible.

States also wish to investigate extending the GST compensation question past July 2022 in the Council due to the ongoing economic uncertainties.

As mandated by the Constitution, the federal government has been accused by a number of states of neglecting to convene with the GST Council once per quarter at least.

Also Read: 42nd GST Council Meeting Highlights, Updates, Outcome, And More

More Information

You can get more information regarding the 43rd GST Council Meeting by visiting the official website of the Central Board of Indirect Taxes and Customs (CBIC) at https://cbic-gst.gov.in/ or https://gstcouncil.gov.in/gst-council-meetings

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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