Decisions and Key Outcomes from the 35th GST Council Meeting

Introduction to the 35th GST Council Session

The 35th Goods and Services Tax (GST) Council convened in New Delhi on June 21, 2019, marking its first session under the newly re-elected government and the chairmanship of India's second female Union Finance Minister, Mrs. Nirmala Sitharaman. This meeting occurred less than a month before the Union Budget 2019, with significant anticipation for resolutions on various indirect tax matters.

Previous GST Council Meetings

The 47th GST Council meeting took place on June 28-29, 2022, in Chandigarh. Union Finance Minister Nirmala Sitharaman presided, making recommendations to revise rates for revenue growth, correct inversion issues, and streamline the GST exemption list. Compliance relief was also extended to e-commerce suppliers and taxpayers under the composition scheme.

On December 29, 2021, the 46th GST Council meeting was held in New Delhi. During this session, the Union FM Nirmala Sitharaman-led council decided to postpone the GST rate increase to 12% for textile products.

The 45th GST Council meeting convened on September 17, 2021. Key discussion points included extending tax concessions for COVID-19 essentials, addressing the matter of GST compensation to states, and rectifying inverted tax structures.

The 43rd GST Council meeting took place on May 28, 2021. The Council approved the reintroduction of the GST amnesty scheme, rationalized late fees for all taxpayers, particularly small ones, and exempted IGST on the import of COVID-treating equipment and relief materials until August 31, 2021.

Key Decisions of the 35th GST Council Meeting

The 35th GST Council meeting concluded with several important resolutions:

1. GST Annual Return Due Date Extended: The deadline for filing GSTR-9, GSTR-9A, and GSTR-9C for FY 2017-18 was extended by two months, until August 31, 2019.

2. Aadhaar-Enabled GST Registration Introduced: To streamline the current GST registration process and minimize paperwork, the GST Council approved a new system for taxpayer verification. Under this system, Aadhaar numbers will be linked to GSTINs during generation.

3. NAA Tenure Extended: The tenure of the National Anti-profiteering Authority (NAA), initially set to end by November 30, 2019, was extended by two years. This extension allows the authority to address pending cases and potentially new ones arising from GST rates rationalization efforts.

4. 10% Penalty for Delayed Profiteered Amount Deposit: The GST Council approved a 10% penalty for delays exceeding 30 days in depositing any profiteered amount. This measure aims to promote timely compliance among taxpayers.

5. E-invoicing to Begin from January 2020: The implementation of a new system for issuing all tax invoices on the GST portal received in-principle approval, scheduled to begin on January 1, 2020. This system applies only to B2B invoicing, eliminating the need for a separate e-way bill for e-invoices, from which returns will be generated. A phased implementation is currently being planned.

6. E-ticketing Mandated for Multiplexes: Among other significant decisions, the GST Council approved a mandatory electronic ticketing system for multi-screen multiplexes. This initiative is expected to help combat tax evasion and the prevalence of black market tickets.

7. Rate Cut Decision for Electric Vehicles and Chargers Deferred: The decision regarding reduced GST rates for electric vehicles and their chargers was postponed to the subsequent Council meeting. The matter has been referred to the Fitment Committee for feasibility assessment. Currently, electric vehicles and chargers are taxed at 12% and 28%, respectively. Similarly, valuation rules for solar power generating systems and wind turbines will be presented to the next Fitment Committee, and its recommendations will then be considered by the GST Council.

8. Lottery Rate Cut Put on Hold: The matter of a rate cut for lotteries, not discussed in the previous council meeting, was extensively deliberated during the 35th session. With two pending cases on this issue before the high court and supreme court, which had referred the matter back to the GST Council, the Council decided to consult the Attorney General of India.

9. GST Appellate Tribunal (GSTAT) Established: The GST Council confirmed that the Goods and Services Tax Appellate Tribunal will serve as the appellate authority, adjudicating appeals from central and state tax authorities' internal dispute resolution systems. States will determine their required number of GSTATs, potentially leading to multiple tribunals within a single state.

10. Other Due Date Extensions:

11. E-Way Bills Blocked for Non-Filing of GST Returns: The regulation stating that e-way bill generation would be disabled for taxpayers who fail to file GST returns in GSTR-3B/GSTR-4 for two consecutive tax periods will come into effect from August 21, 2019, later than the originally notified date of June 21, 2019.

Live Updates from the Meeting

During the 35th GST Council meeting, real-time updates were shared:

• 6:30 P.M. The GST Council meeting concluded, followed by a press conference addressed by the Finance Minister and the Revenue Secretary.
• 5:28 P.M. Sources indicated that a GST rate cut from 18% to 12% for electric chargers was approved.
• 5:18 P.M. Sources reported that a Fitment Committee would examine the feasibility of reducing rates for electric vehicles.
• 5:00 P.M. Sources suggested that the GST Council might extend the due date for filing annual GST returns (GSTR-9, GSTR-9A, and GSTR-9C) for FY 2017-18 by one month, until July 31, 2019.
• 4:00 P.M. FM Nirmala Sitharaman initiated the 35th GST Council meet, conveying an important message hinting at further rate cuts and future plans to incorporate petrol, natural gas, and alcohol under GST.
• 2:00 P.M. The GST Council meeting officially began.
• 11:45 A.M. Pre-Budget discussions commenced with State Finance Ministers.
• 11:00 A.M. Union Finance Minister Nirmala Sitharaman arrived for the 35th GST Council Meeting.

Expected Discussions and Proposals

Prior to the 35th GST Council meeting, several key items were anticipated to be discussed:

1. Review of GSTR-9 Filings Status: Despite being a summary return, GSTR-9 requires extensive information, some of which is not typically found in GSTR-1 and GSTR-3B. Its preparation demands considerable effort. Taxpayers still faced confusion regarding this form, and efforts were needed to improve filing rates and ensure compliance for FY 2017-18.

2. Clarity on Input Tax Credit for New Simplified GST Returns: The GST Council was expected to address various issues requiring clarification, particularly the mechanism for claiming Input Tax Credit (ITC) under the proposed New GST Returns, also known as GST 2.0. Under the new system, ITC would be automatically available through forms ANX-1 and ANX-2. However, detailed clarification was needed on ITC claims during the transitional period when both GSTR-1 and GSTR-3B were being filed alongside ANX-1 testing.

3. Determination of E-invoicing Applicability: E-invoicing had garnered significant business interest in the preceding month. The government was reportedly considering making e-invoicing mandatory for businesses with an annual turnover exceeding Rs 50 crore. This measure aimed to combat tax evasion, reconcile gaps between GSTR-1 and GSTR-3B, and prevent misuse of input tax credit. Questions remained regarding the impact of e-invoicing, especially concerning simplified returns for affected taxpayers on the GSTN, as sales details would be uploaded during invoicing. The implications for taxpayers interacting with e-invoicing-mandated businesses also needed clarification.

4. Implementation of Geotagging via RFID: While the RFID tagging mechanism allowed for e-way bill verification, its implementation was still pending. This system was expected to help monitor unaccounted consignments moving across India.

5. Rationalization of Tax Rates: Discussions were expected on reducing the GST rate for electric vehicles from 12% to 5% to stimulate sales, and for electric chargers from 28% to 18%. Rate cuts for hybrid vehicles were also on the agenda. Previous council meetings had established committees to study the taxation of lotteries and other items, with decisions pending on rationalizing the tax structure for state-run and private lotteries. Taxation of solar projects was another key area for discussion. The automobile sector also hoped for a GST rate cut from the maximum 28% to aid recovery amidst slow sales. The Council might also consider levying GST on items previously exempt, such as Extra Neutral Alcohol (ENA) used in manufacturing spirits, and initiate discussions on fixing GST rates for petroleum products and natural gas.

6. Proposal to Extend NAA Tenure and Approve Appellate Tribunal Setups: A proposal was presented to extend the two-year tenure of the National Anti-profiteering Authority (NAA), ending on November 30, 2019, by an additional year until November 30, 2020. With over 60 cases still pending, the authority required more time to issue orders. Multiple proposals were before the GST Council for establishing more appellate tribunals nationwide.

7. Miscellaneous Topics: The GST Council had a proposal to introduce e-ticketing for cinemas. Additionally, the Council would decide on establishing GST Tribunals in various states. Decisions from the preceding 34th GST Council meeting in March 2019 were also presented by Revenue Secretary Ajay Bhushan Pandey.

Understanding GST

GST, or Goods and Services Tax, is an indirect tax that has replaced numerous other indirect taxes in India. The Goods and Service Tax Act received parliamentary approval on March 29, 2017. For more information, read about GST law.