Page 9 - Banking Finance May 2020

GST UPDATE

GST

NEWS
NEWS
NEWS
NEWS
NEWS

GST Council May Provide Sources in the Finance Ministry said the compensation fund that gets its
that the late fee is imposed to ensure funds through a levy of GST compen-
Relief to Trade on issue of that the taxpayers file returns (GSTR sation cess on few items. However,

late fees 3B) in time and pay taxes on the with funds not getting enough collec-
GST Council has agreed to discuss the amount collected from buyers and due tions since August 2019, the GST com-
issue of late fee over delayed filing of to the government. This is a step to pensation to states have been delayed
returns at its next meeting slated later ensure that a certain discipline is main- with Centre now looking at getting the
this month. tained regarding compliance. Honest GST Council nod for extending the levy
and compliant taxpayers would be dis- of compensation cess at least a couple
Businesses have sought a waiver from criminated negatively in the absence of of years beyond the cut-off fifth year
payment of late fee on GST returns such a provision. to make good the gap in cess collec-
filed for the earlier period between tion actual compensation payment to
August 2017 (start of GST) and Janu-
ary 2020. This, they have said, was GST council may extend states.
important considering the current busi- compensation cess levy "This (extending the duration of GST
ness environment where most of the The Central government is looking at compensation cess) has been discussed
trade is losing money and do not have paying GST compensation to states in the past to ensure states are paid
enough resources to even pay the full compensation for any loss of rev-
using a portion of its borrowings and
taxes. enue in first five years of the implemen-
repaying it by collecting cess in the
It may be noted that for helping the sixth or further subsequent years. tation of the new indirect tax regime
small businesses having turnover less while the Centre repays its liabilities
Under the GST law, states are guaran- through cess collections in subsequent
than Rs 5 crore in the current situation teed full compensation for any revenue
arising out of Covid-19, Finance Minis- years. The GST Council may explore the
ter Nirmala Sitharaman had already loss for the first five years after the option again at its next meeting," gov-
announced extension of GST returns of introduction of the goods and services ernment sources privy to the develop-
February, March, April and May 2020 tax (GST) in July 2017. ment said.
till June 2020. No late fee will be The compensation is a gap between
charged for this period. actual revenue collected and projected Govt may not lower GST
revenue. The projected revenue is rev-
"While the extension for filing GST re- The central government may not ac-
turns is welcome, government should enue growth of 14 per cent for states cept industry demands to substantially
also waive late fee for past delays to per year over base year 2015-16. reduce the Goods and Services Tax
help the businesses facing acute liquid- As per the GST Act, full compensation (GST) for six months to boost demand
ity problems," said a Delhi based to the states has to be paid for a pe- in the aftermath of the coronavirus
trader asking not to be named. riod of five years till FY22 only through disease (Covid-19) pandemic. The ex-

BANKING FINANCE | MAY | 2020 | 9