This article outlines the significant recommendations and anticipated discussions from the 26th Goods and Services Tax (GST) Council meeting, held on March 10, 2018, in New Delhi.

Recent GST Council Meetings

June 24, 2022: The 47th GST Council meeting, chaired by Union Finance Minister Nirmala Sitharaman on June 28-29, 2022, in Chandigarh, focused on rate revisions for revenue growth and correcting inversion, alongside refining the GST exemption list. It also provided compliance relief for e-commerce suppliers and taxpayers under the composition scheme. For more details, refer to the 47th GST Council meeting news.

December 29, 2021: On December 31, 2021, the 46th GST Council meeting took place in New Delhi, led by Union FM Nirmala Sitharaman. A key outcome was the decision to postpone the GST rate increase to 12% for the textiles sector. For further information, see the 46th GST Council meeting news.

September 1, 2021: The 45th GST Council meeting was convened on September 17, 2021. The agenda included extending tax concessions for COVID-19 essential items, addressing GST compensation to states, and rectifying inverted tax structures. Additional information is available in the 45th GST Council meeting news.

May 28, 2021: The 43rd GST Council meeting, held on May 28, 2021, reintroduced the GST amnesty scheme and rationalized late fees for all taxpayers, especially small businesses. It also granted IGST exemption on importing COVID-19 treatment equipment and relief materials until August 31, 2021. Details can be found in the 43rd GST Council meeting highlights.

Key Decisions of the 26th GST Council Meeting

The 26th GST Council meeting concluded on March 10, 2018, in Vigyan Bhawan, New Delhi. The significant outcomes included:

• GST Return Simplification: The existing GST Return filing system was extended for three more months. Taxpayers were advised to continue filing GSTR-1 and GSTR-3B as the GSTN platform underwent continuous improvements to handle new challenges.
• E-Way Bill Implementation: Inter-state e-way bill implementation was set to begin from April 1, 2018, while intra-state implementation would commence in a phased manner from April 15, 2018, with states divided into four groups for rollout.
• Reverse Charge Mechanism (RCM): The applicability of RCM for supplies made by unregistered persons to registered persons was deferred until July 1, 2018.
• TDS & TCS Applicability: The implementation of Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) was postponed until June 30, 2018, pending procedural updates.
• Exporters' Exemptions: Exporters utilizing various export promotion schemes could continue to claim exemptions on their imports until October 1, 2018. An e-Wallet scheme was anticipated to be introduced from April 1, 2018, to ensure continued benefits.
• Export Refund Claims: The Council urged the GSTN to accelerate the processing of export refund claims.
• No GST Rate Adjustments: No changes to GST rates were announced during this meeting.
• Grievance Redressal Committee: A committee was established to address user grievances related to IT glitches on the GSTN portal.

For highlights from the previous 25th GST Council meeting, read our blog.

Despite high expectations, major announcements concerning Input Tax Credit (ITC) and return simplification were not made during this council meeting.

Expected Areas of Discussion at the 26th GST Council Meeting

Before the meeting, several key areas were anticipated for discussion:

A. Return Filing Simplification and Input Credit Claim Scheme

• Focus on ITC Claim Origin: It was expected that the Council would clarify whether Input Tax Credit claims would originate from the supplier's sales invoice uploading or the buyer's return filing.
• Ongoing Invoice Process: A continuous process for suppliers to upload invoices and recipients to accept or reject them was envisioned. Acceptances up to a specific monthly date would be processed for relevant month's ITC claims.
• Single Monthly Return & Quarterly Reconciliation: A system featuring a single monthly return combined with quarterly reconciliation of uploaded invoices/documents was under consideration. The new return filing system might undergo a trial period before full implementation. Additionally, two separate monthly due dates for return filing were proposed for large and small taxpayers to mitigate technical issues.
• Affected Taxpayers: This would impact taxpayers required to file GSTR-1, GSTR-2, and GSTR-3.
• Unaffected Taxpayers: Those filing only GSTR-4, GSTR-5, GSTR-5A, or GSTR-6 would likely remain unaffected.
• GSTR-3B Extension: The GSTR-3B filing facility, scheduled to expire on March 31, was expected to be extended for several more months.

B. E-Way Bill Review and Implementation

• Interstate Rollout: The April 1st rollout for interstate applicability was highly anticipated.
• Intra-state Applicability: Implementation across 4 to 5 states was expected to begin on a pilot basis.

C. Composition Scheme Changes

• Threshold Enhancement: An increase in the Composition Scheme threshold from the existing Rs 1 crore to Rs 3-5 crore was anticipated.
• RCM for Composition Dealers: It was expected that Reverse Charge Mechanism under section 9(4) would also apply to composition dealers.

D. Rate Changes

• Agricultural Sector: Rationalization of GST rates on agricultural implements and items used by farmers was a potential agenda item.
• Clean Energy Push: The government's focus on clean energy might lead to reduced GST rates on electric vehicles.

E. Other Anticipated Decisions

• GST on Extra Neutral Alcohol (ENA): A levy of GST on ENA was likely to increase prices of consumable liquor, one of its final products.
• Centralized Registration: Centralized registration for service providers such as banks, financial institutions, and insurance firms was expected.
• ITC Restrictions Removal: Amendments to the ITC provision in GST were anticipated, allowing businesses to claim credit for all business-related expenses (e.g., employee transport), as recommended by the law review committee.
• Natural Gas and Real Estate Inclusion: The entry of natural gas and real estate into the indirect tax regime was under discussion.
• Anti-Profiteering Mechanism: Streamlining the Anti-Profiteering mechanism to empower the National Anti-Profiteering Authority (NAA) was also on the agenda.