Context: The Finance Minister at a GST council meeting recently said that GST collections in the past two months have only reached 45% of the target amount.
Decisions taken at the GST council meeting
- It approved a slew of measures to ease tax compliance, including a reduction in late fees for past returns, and COVID-19 related relief for small tax payers for the period between February and July 2020 provided returns are filed by September.
- Businesses who have not filed their GSTR-3B returns from July 2017 to January 2020 can avail of a reduced late fee of ₹500 if they have tax liabilities and a late fee waiver for those with nil liabilities, so long as returns are filed between July 1 and September 30.
- Small taxpayers with an aggregate turnover of ₹5 crore or less will also not be charged any interest for late filing of returns for the tax period of February, March, and April 2020.
- Under GST law, the Centre must pay States full compensation for any shortfall in revenue collections until 2022.
- Recently, the Centre also paid pending compensation dues for the December 2019 to February 2020 period. However, with revenues crashing since the lockdown, alternative options need to be explored.
- However, with the current financial situation due to pandemic, smaller businesses were aggressively seeking stimulus and some of their requests have been well considered by the Council.
- Given the shortfall in revenue, the council is expected to meet again in July to discuss the issue of compensation cess and dues to States, and also the possibility of borrowing money from the market to meet these dues.
About GST Council
The Council is a joint forum of the center and the states and consists of the following members:
- Chairperson: The Union Finance Minister
- The Union Minister of State in-charge of Revenue or Finance
- The Minister-in-charge of Finance or any other Minister nominated by each state government.
- Vice-Chairperson: The members of the Council from the states have to choose one amongst themselves to be the Vice-Chairperson of the Council. They can also decide his term.
- The Union Cabinet also decided to include the Chairperson of the Central Board of Excise and Customs (CBEC) as a permanent invitee (non-voting) to all proceedings of the Council.
Working of GST Council
The decisions of the Council are taken at its meetings.
- Quorum: One-half of the total number of members of the Council is the quorum for conducting a meeting.
- Every decision of the Council is to be taken by a majority of not less than three-fourths of the weighted votes of the members present and voting at the meeting.
- The vote of the central government shall have a weightage of one-third of the total votes cast in that meeting.
- The votes of all the state governments combined shall have a weightage of two-thirds of the total votes cast in that meeting.
The Council is required to make recommendations to the centre and the states on the following matters:
- The taxes, cesses and surcharges levied by the centre, the states and the local bodies that would get merged in GST.
- The goods and services that may be subjected to GST or exempted from GST.
- Model GST Laws, principles of levy, apportionment of GST levied on supplies in the course of inter-state trade or commerce and the principles that govern the place of supply.
- The threshold limit of turnover below which goods and services may be exempted from GST.
- The rates including floor rates with bands of GST.
- Any special rate or rates for a specified period to raise additional resources during any natural calamity or disaster.
- Special provision with respect to the states of Arunachal Pradesh, Assam, Jammu and Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand.
Image Source: TH