37th GST Council Meeting – Key Highlights

1. Policy Changes

New Return Filing System

New Return filing to be now introduced from April 2020 (Earlier proposed from Oct, 19)

New return system now to be introduced from April, 2020 (earlier proposed from October, 2019), in order to give ample opportunity to taxpayers as well as the system to adapt and accordingly specifying the due date for furnishing of return in FORM GSTR-3B and details of outward supplies in FORM GSTR-1 for the period October, 2019 -March, 2020.

Annual Returns and GST Audits

1) Gst Annual Return GSTR-9 and 9A  Optional for those with turnover upto 2 Cr for FY 17-18 & 18-19.

2) GSTR-9 is mandatory for those turnover is above 2 Cr.

3) No relief in case of GSTR-9C – GST Audit Form.

4) GSTR-9 & 9C to be made “Saral”.

Circulars (Old/New) to be issued on following matters

1) Refund RFD – 01A,       

2) Supply of ITeS

3) Rescinding circulars wrt Post-Sales Discounts

Issuance of circulars for uniformity in application of law across all jurisdictions:

a. procedure to claim refund in FORM GST RFD-01A subsequent to favourable order in appeal or any other forum;

b. eligibility to file a refund application in FORM GST RFD-01A for a period and category under which a NIL refund application has already been filed; and

c. clarification regarding supply of Information Technology enabled Services (ITeS services) (in supersession of Circular No. 107/26/2019-GST dated 18.07.2019) being made on own account or as intermediary.

2. Reduction in Rates and Rationalisation of various measures

Hospitality and Tourism Industry:

1) Tariffs 7500 & above – GST 18%,

2) Tariffs between 1,000-7500 – GST 12%,

3) Tariffs below 1000 – Nil,

4) Outside Catering – GST 5% without ITC (Reduce from 18%),

Job Work Sector

1) Diamond Job work – GST 1.5% (Reduce From 5% ),

2) Other Job-work – GST 12% (Reduce from 18%).

Warehousing

Exempted Storage & warehousing services wrt certain agricultural products 

Transportation

Export freight exemption further extended till 30th September, 2020

Insurance Sector

Exemption given to BSB Crop insurance of WB state & Life insurance services by Central Armed Paramilitary Forces 

Export Promotion

1) Exemption given to intermediary services where both supplier and recipient is outside India,

2) Place of supply for specified R&D Services and supply of chip design R&D Services shall be th to the location of service recipient

New Law for 2 union territory

Suitable amendments in CGST Act, UTGST Act, and the corresponding SGST Acts in view of creation of UTs of Jammu & Kashmir and Ladakh.

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7 Changes in Income Tax Laws come into effect from September 1

Generally Income tax related changes announced in the Budget usually come into effect from April 1.But in the FY 2019-20 budgets was presented in July this year after the general elections, there are certain tax changes that will come into effect from September 1, 2019. 

·         TDS on additional payments made when purchasing immovable property

From September 1, 2019, while buying a property, you will have  to include the payment made for other services or amenities such as club membership fee, car parking fee, electricity and water facility fee and so on when computing the amount paid for the property for the purpose of deducting TDS. The TDS will continue to be deducted at the rate of one . 

·         TDS on cash withdrawals from bank account

Cash withdrawals exceeding Rs 1 crore on aggregate basis during the year from an account held with a bank, cooperative bank or post office will invite levy of TDS from September 1. The move is aimed at discouraging large cash transactions and also to promote a less cash economy. 

A new section 194N has been inserted in the Income Tax Act which defines that TDS will be levied at the rate of two per cent on cash withdrawals made from the account. 

·         TDS on payments made by individuals and HUFs to contractors and professionals

From September 1, individuals and HUFs making a payment to contractors and professionals exceeding Rs 50 lakh in aggregate per annum will also be required to deduct TDS at the rate of 5 per cent. 

This would mean that individuals making payments over this limit for house renovation, wedding functions or for any other purpose to a single professional in a year would be required to deduct tax at the time of making the payment. 

A new section 194N has been inserted in the Income Tax Act for this purpose. However, in order to provide ease of compliance, individuals and HUFs, deducting the tax will not be required to obtain TAN (tax deduction account number). The new law will be applicable to all the payments made by the individual whether for personal use or for business purposes (in case their accounts are not required to be audited.) 

·         TDS on non-exempt portion of life insurance

If life insurance maturity proceeds received by you are taxable in your hands, then TDS will be deducted at the rate of 5 per cent on the net income portion. The net income portion is defined as the total sum received less of total amount of insurance premium paid. 

Currently, proceeds received at the maturity of a life insurance policy are exempted from tax if the annual premium paid does not exceed 10 per cent (20 per cent in case of insurance policies sold prior to April 2012) of the sum assured. 

"If the maturity amount received by an individual are taxable, then TDS will be deducted only on the net income portion and not on the total amount paid. Remember TDS will be deducted at the rate of 5 per cent in case the taxable proceeds, i.e., net income portion exceeds Rs 1 lakh. Prior to this TDS was deducted at the rate of 1 per cent on the total amount paid." 

·         Banks and FIs can be asked to report even small transactions

Till now banks and other financial institutions are required to report specified financial transactions if the amount exceeded the threshold limit. In most of the reportable transactions, the limit has been Rs 50,000 or more. These transactions were to be reported to the income tax department through a Statement of Financial Transactions (SFT) required to be filed by all banks and FIs. 

However, the government has widened the scope of reporting requirement for such transactions by removing the minimum floor of Rs 50,000, above which financial transactions are required to be reported. This has been done via legislation introduced in the last budget. This means that from September 1, banks and FIs can be asked to report even small transactions to the tax department which in turn can use the data to check your ITR. 

Wadhwa adds, "Previously, the tax department could ask for a report of transactions of individuals equal to or more than Rs 50,000. However, this floor of Rs 50,000 has been removed in the budget of July 2019 enabling the income tax department to ask for information about small transactions as well. Thus, the CBDT can now require reporting of transaction even if the value of such transaction is nominal." 

·         If PAN is not linked with Aadhaar

As per rules existing prior to changes announced in July Budget 2019 PAN would have become invalid if not linked with Aadhaar by a specified deadline. This would have meant that in case of a person's PAN becoming invalid, it would be treated as if the person never had a PAN. 

However, to protect the validity of previous transactions done using the PAN, Budget 2019 changed the rules such that PAN will become now become inoperative but not invalid if not linked with Aadhaar by the specified deadline. 

·         Inter-changeability of PAN and Aadhaar and mandatory quoting in prescribed transactions

Another important announcement in Budget 2019 was inter-changeability of PAN and Aadhaar. "However, Aadhaar can be quoted in lieu of PAN only for certain prescribed transactions. Though the new law comes into effect from September 1, the government is yet to notify the certain prescribed transactions.’’

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