On Friday, the Goods and Services Tax Council headed by Finance Minister Nirmala Sitharaman decided to further ease the compliance burden of businesses by providing relief on late fees and interest payable on the payments.
As a measure to clean up pendency in return filing, the GST Council has reduced late fees for non-furnishing FORM GSTR-3B for the tax period of July 2017 to January 2020. If there is no tax liability, there will be ZERO late fees. If there is any tax liability, the maximum late fee has been set at Rs 500 per return. For all the GSTR-3B returns furnished between July 1, 2020, to September 31, 2020, the reduced rate of late fee will apply. Also as state demanded they will be funded through market borrowings. The GST collection has shown a downturn about 45 percent creating a problem of compensation to states. In July the Council will meet again to specifically discuss the issue, said Finance Minister Nirmala Sitaram.
The council divided the interest on delayed filing of Goods and Service returns for February, to provide relief to the small taxpayers which have a turnover up to Rs 5 crore, March and April to 9 percent from 18 percent, provided the returns are filled by September 2020. Taxpayers can file for restoration of GST registration that has been canceled till June 12, 2020, through a one-time extension being offered till September 30.
Rate rationalization
GST rates for textiles, footwear, and fertilizer have postponed rationalization. As these products faced inverted duty structures, principally all members agreed that the duty rates need to be corrected.
Compensation Cess
Compensation cess which has to be given to the states will be discussed in July when the Council will meet again for it. As compensation cess has been released worth Rs 36,400 crore for December to February period, the fund shortfall remains an issue even with the Centre, whereas states have asked to raise funds through market borrowings to GST council.
GST collection
With the April and May collections falling well short pf targets of Rs 1 lakh crore per month due to lockdown resulting in hurting the GST collections. The Government is faced with a tough balancing act, as on one hand, the government needs robust GST collections to assist meet its constant and extraordinary expenses during the pandemic, whereas on the other hand, businesses are looking for relief to help them tide the major disruptions, loss of revenue and uncertainties.
