GST Council defers the implementation of new returns and e-invoicing

Finance Minister Nirmala Sitharaman addressed the press meet around 6 p.m. on Saturday, 14th of March 2020 at New Delhi. She announced some essential measures taken by the GST Council to discipline the IT systems for GST. GST on mobile phones, matches and domestic MRO services will be rationalised to correct the prevailing inverted structure.

As speculated earlier, the introduction of new GST returns and e-invoicing have been postponed up to September 2020. While the e-invoicing system will now apply from the 1st of October 2020, new GST returns will be implemented in phases between October 2020 and January 2021.

Further details are awaited about the incremental approach to be adopted. Online and offline trial versions of both these systems are up and running on the GSTN-managed portals. Also, services such as banking, FI, NBFC, GTA and passenger transportation services will be exempted from the requirement of QR code and e-invoicing.

Last year, the new return system was announced in phases with the ANX-1 and ANX-2 beginning from October 2019, followed by the filing of RET-1/2/3 from December 2019. However, it was pushed for one-shot applicability from April 2020. Likewise, the applicability of e-invoicing and QR code generation on Business-to-Business (B2B) invoices had to be applicable from April 2020 for large turnover-based taxpayers. 

The extension means that the current filing system in GSTR-1, GSTR-2A and GSTR-3B will continue till September 2020. During this time, the Council wants to deal with compliance-related issues as its top priority. By the 31st of July 2020, Infosys and GSTN will begin working towards linking of form GSTR-1 with form GSTR-3B and in turn, form GSTR-2A, an Aadhaar-based authentication and improving the scalability of IT systems to handle up to 3 lakh taxpayers at a single time. The Council wants Nandan Nilekani of Infosys to be part of the next three meetings until a year for regular updates on the progress made.

More measures are being taken to curb fake invoicing and tax credits. The input tax credit will not be passed on in the supply chain for cases of new registration unless the KYC and premise verification is complete. ‘Know your Supplier’ facility will be launched for taxpayers to fetch necessary details of their suppliers to enable genuine transactions.

In another significant development, the GST Council has decided to push the due date for filing of annual returns for FY 2018-19. Forms GSTR-9 and 9C can now be filed before the 30th of June 2020. As a relief to small turnover-based MSMEs, the threshold limit for the applicability of GSTR-9C is raised to Rs 5 crore p.a. from Rs 2 crore p.a. only for FY 2018-19.

Also Read: Third National GST Conference Puts Taxpayers’ Grievances Under Radar

Also, the Council has waived off the late fees for annual returns for both FY 2017-18 and FY 2018-19, where the yearly turnover falls under Rs 2 crore. This means that businesses with a turnover of more than Rs 5 crore must file both GSTR-9 and 9C as usual. MSME businesses with a turnover between Rs 2 crore and Rs 5 crore should file only GSTR-9 with late fee applicability in case of delay. GSTR-9C will not apply to them. For businesses with a turnover below Rs 2 crore can still file GSTR-9 without a late fee. Further clarity will be obtained once the necessary CGST notifications are issued.

The Council has also agreed to charge the interest on net GST liability basis as a retrospective move from the 1st of July 2017. The demand for this change was sought from all quarters of stakeholders.

The time limit for revoking the cancellation of the GST registration has been extended up to the 30th of June 2020 for taxpayers who have applied for cancellation till 14th March 2020. Usually, the time limit as per the GST law is 30 days from the date of cancellation. This extension is allowed as a one-time measure to let taxpayers continue with their businesses.

The Council had waived off the requirement of filing GSTR-1 in 2019-2020 when the taxpayers who wished to opt for form CMP-02 under the composition scheme for service providers (notification 2/2019 dated 7th of March 2019) could not do so. GSTR-1, GSTR-3B and GSTR-7 for taxpayers registered from the Union Territory of Ladakh have been provided with an extension till the 24th of March 2020 for a span from July 2019 to January 2020. 

The exporters had some good news, too. While their refund claims will now be bundled up for processing and disbursal, all the present IGST and cess exemptions on the imports made under the AA/EPCG/EOU schemes will continue up to the 31st of March 2021. However, the ambitious e-wallet scheme is deferred by one year.

The GST Council is more likely to meet in April 2020 for a second round of rate rationalisation steps and status checks in IT systems.

For any clarifications/feedback on the topic, please contact the writer at annapoorna.m@cleartax.in