GST Council approves making GST-Network a government entity; simplifies return filing process

The GST Council has approved making the GST-Network (GSTN) a government entity by allowing the regime to take over the stake held by private entities. Post the deal, the central government will own 50 percent of the GSTN. The states will collectively hold the remainder.

Post its 27th meeting on Friday, the Council unveiled a new simplified return filing process that will require a taxpayer to file only one return every month. Finance Secretary Hasmukh Adhia said the new system of single monthly return for GST will come into force in six months. Composition dealer and zero-transaction dealers will continue to file returns on a quarterly basis. As on date, some 30% of all returns filed are nil returns - which means there are no transactions on them, he added.

“It will take about six month for GSTN to prepare for it so for that period the current arrangement of GSTR3B and GSTR 1 will continue. This will be the first phase of transition where the current system will continue for the next six months,” said Adhia.

The GSTN is a firm that provides the IT backbone for the indirect tax regime. Talking about the GSTN’s ownership structure, Finance Minister Arun Jaitley, the Chairman of the Council, said the GSTN is currently 24.5 percent owned by the central government, and a similar percentage is held by state governments collectively. The remaining, 51 percent, is with five private financial institutions – HDFC Ltd, HDFC Bank Ltd, ICICI Bank Ltd, the NSE Strategic Investment Co and LIC Housing Finance Ltd.

The Council has agreed to a proposal of buying out the stake of private entities to make GSTN a government-owned entity, Jaitley said, adding that the central government will own 50 percent and the remainder will be collectively held by the state governments.

Digital payments, sugar & ethanol

Jaitley said the Council has referred the issue, of giving a two percent incentive for digital payments, to a five-member committee of state finance ministers. While most states are in favour of giving the incentive if all payments are paid digitally or through cheques, some want a small negative list, reported PTI.

Furthermore, the Council deferred the decision on imposing a cess on sugar, beyond the GST tax rates, and the issue has been referred to a group of five states. A surcharge will subsidise sugarcane growers, who are suffering owing to weak prices. West Bengal Finance Minister Amit Mitra said some states are not in favour of such a levy.

The Council also deferred the decision on reducing duties on ethanol.

Experts’ take

Abhishek Jain, Tax Partner, EY India, told Firstpost: “The GST Council in its 27th Meeting today has in principle approved the contours of the new return design; the said being in a phased manner with GSTR1 and GSTR 3B continuing for six months, single return with possibility of provisional credit for another six months and only a single return with credits of only invoices uploaded by supplier thereafter. Some of the highlights being a single return with staggered due dates basis turnover, real time credit eligibility basis invoices uploaded by suppliers, no reversal or recoveries in most scenarios from buyer on non- payment of tax, among others.”

While some of the ideas are welcome, an inability, from a buyers’ standpoint, to upload missing invoices or take provisional credit, could lead to losses for businesses where the suppliers are not traceable and tax has been paid to them. It may also adversely impact cash flows on account of delayed credit in case of delays in uploading of invoices by the sellers, Jain added.

Atul Gupta, a senior director at Deloitte India, said that reintroducing a surcharge, or cess, on sugar sends a wrong signal, and urged the Council to focus on steps to reduce evasion of GST in order to raise funds, reported Reuters.

Monthly GST collections

The Ministry of Finance (MoF), on Tuesday, said that the total revenue collected under the Goods and Services Tax (GST), in April , surpassed Rs 1 lakh crore, a first as far as monthly collections go.

The MoF obviously went to town with the data – Finance Minister Arun Jaitley termed it a ’landmark achievement’. His ministry said that the buoyancy in tax collections reflects both an upswing in the economy and better compliance. The total revenue earned by central and the state governments after settlement, in April 2018, is Rs 32,493 crore and Rs 40,257 crore respectively.

April’s tax haul includes collections made in April and also CGST and SGST collections of March.

Since its roll out on 1 July 2017, the GST Council has reportedly made some 376 changes to the GST by amending rules, issuing circulars and clarifications related to rates, exemptions and refunds.

With inputs from agencies