The Goods and Services Tax (GST) Council led by Finance Minister, in its first meeting of the financial year 2021-22, decided to exempt IGST on import of free COVID-related supplies till August 31.
GS-III: Indian Economy (Growth and Development of Indian Economy, Fiscal Policy, Taxation)
Dimensions of the Article:
- GST Council
- Highlights of the 43rd Goods and Services Tax (GST) Council meeting
- Inverted Duty Structure under GST
GST Council: Click Here to read about GST, GST Council, and Issues with GST Council through the Pandemic.
Highlights of the 43rd Goods and Services Tax (GST) Council meeting
- The GST Council decided to exempt IGST on import of free COVID-related supplies till August 31 and also put Amphotericin B, a key medicine for the treatment of black fungus, in the list of items exempted from IGST.
- Exemptions will be granted to the import of relief items even if they have been purchased as long as they are meant for donations to state governments. Earlier, Integrated Goods & Services Tax (IGST) exemption was granted only free of cost imports.
- A Group of Ministers (GoM) will be formed quickly, who will submit a report to examine the need for further reductions and decide on any new rates in exemptions.
- Same as 2020, the GST Council felt that this is not the appropriate time for a correction in Inversion duty, so this remains where it is.
- The Annual Return Filing will continue to be optional for 2020-21, for the small taxpayers with turnover less than Rs 2 crore. The Law Committee will look into issues involving Quarterly Return Filing and Quarterly Payment, the modalities need to be worked out.
- The GST compensation cess has the same formula as the one in 2020 to be adopted in 2021 as well. The rough estimate is that the centre will have to borrow Rs 1.58 lakh crore and pass it on to states.
- Separately, reducing GST rates on two-wheelers and bringing natural gas into the ambit of GST were also reportedly on the agenda.
GST Amnesty Scheme
The GST Amnesty Scheme was announced, which will provide relief to small taxpayers and the amnesty scheme has been recommended for reducing late fees. It is likely to benefit around 89 per cent of GST taxpayers. They can file pending returns, avail benefits of the scheme, with reduced late fees.
Inverted Duty Structure under GST
- The term ‘Inverted Tax Structure’ refers to a situation where the rate of tax on inputs purchased (i.e., GST rate paid on inputs received) is more than the rate of tax on outward supplies (i.e., GST rate payable on sales).
- A registered person may claim a refund of unutilised Input Tax Credit (ITC).
- The ITC on account of inverted tax structure can be claimed at the end of any tax period where the credit has accumulated on account of the rate of tax on inputs being higher than the rate of tax on output supplies. A tax period is a period for which a return is required to be furnished.
-Source: The Hindu