The GST Council recently held its 22nd meeting to discuss various issues being faced by the industry under the new GST regime. The Council in this regard relaxed or deferred implementation of number of provisions to provide for time for the industry to get accustomed with the new provisions. Other than some minor changes in the rate of tax on certain goods and services, some of the important changes proposed in the meeting held in Delhi on 6th of October are:

Compliance relief for small taxpayers:

Service providers whose annual aggregate turnover is less than Rs. 20 lacs (Rs. 10 lacs in special category states except J & K) will be exempted from mandatory registration even if they are making inter-State taxable supplies of services.

Small taxpayers with annual aggregate turnover up to Rs. 1.5 crore will be required to file quarterly returns in Form GSTR-1, 2 & 3 and pay GST on quarterly basis, starting from the quarter of October-December, 2017. Registered buyers from such small taxpayers however would be eligible to avail ITC on monthly basis.

These taxpayers (aggregate turnover up to Rs. 1.5 crore) will also not be required to pay GST at the time of receipt of advances on account of supply of goods. The tax would be payable only when supply of goods is made. Service provided by a Goods Transportation Agency (GTA) to an unregistered person will also be exempted from GST.

Reverse charge mechanism under Section 9(4) of CGST Act and 5(4) under IGST Act, i.e. liability when goods or services are procured from unregistered dealers, is to be suspended till 31-3-2018.

Relief package for exporters:

The Council has extended benefit of Advance Authorization / Export Promotion Capital Goods (EPCG) / 100% EOU schemes in respect of sourcing inputs etc. from abroad as well as from domestic suppliers. According to Press Release by Ministry of Finance, companies working under said schemes/authorisations would not have to pay IGST, Cess etc. on imports. Domestic supplies to holders of AA / EPCG and EOUs would also be treated as deemed exports and refund of tax paid on such supplies be given to the supplier.

Further, merchant exporters will have to pay a nominal GST of 0.1% for procuring goods from domestic suppliers for the purpose of exports.

A permanent solution to the problem of cash blockage has also been proposed. Under this, ‘e-wallet’ would be credited with a notional amount as if it is an advance refund, and this credit would be used by the exporter to pay GST.

Composition Scheme:

Threshold of annual aggregate turnover for availing composition scheme is to be increased to Rs. 1 crore (including Jammu & Kashmir and Uttarakhand, and Rs. 75 lacs for rest of the special category States). Further, persons who are eligible for composition scheme and are providing any exempt service also will now be eligible for availing composition scheme.

Other reliefs:

While registration and operationalisation of TDS/TCS provisions has been postponed till 31-3-2018, E-way bill system will be introduced in a staggered fashion from 1-1-2018 and shall be rolled out nation-wide only from 1-4-2018.

GSTR - 4 for the quarter July-September, 2017 by a composition scheme dealer and GSTR-6 for the months of July, August and September, 2017 by an input service distributor, would have to be filed by 15-11-2017.