For any non-product related queries, please write to info@perfios.com.
For any non-product related queries, please write to info@perfios.com.
Author: Ramgopal Subramani, Chief Operating Officer
The 42nd Goods and Service Tax (GST) Council meeting was held on 5th Oct 2020 and the 43rd meeting on 12th Oct 2020, chaired by Finance Minister Nirmala Sitharaman, to discuss the GST compensation for state governments for FY21.
Amidst all the speculations, the GST Council has however brought some relief to businesses intending to enhance Ease of Doing Business and improve the compliance experience.
The following amendments have been approved in the framework:
Timely furnishing details of outward supplies (GSTR-1) by a taxpayer and his suppliers will lead to:
● Enabling the system to auto-generate GSTR-3B from GSTR-1, viz-a-viz, Auto-generation of
Liability and Input Tax Credit (ITC) in GSTR-3B from GSTR-1
● Allow taxpayers to view net ITC from all sources before the due date of tax payments
To achieve the above said, quarterly filing of GSTR-1 has been made mandatory before GSTR-3B and the due date for the same being extended to 13 th of the month succeeding the quarter w.e.f. 01.01.2021.
● Government has extended the quarterly GST return facility to business with turnover of less than 5 Cr from the earlier limit of 1.5 Cr. This will benefit many small businesses to be tax compliant, at the same time reducing the compliance overhead.
● Government is expecting to have significant larger number of micro and small businesses now actively participate and thus see increased tax compliance and the filing window is aligned to other statutory return filings.
● With objective of increasing market reach for these micro and small business, GSTN has mandated declaration of 4-digit HSN code as part of their GST filing as part of their B2B invoices.
● Declaration of HSN for goods / SAC for services in invoices at 4-digits and 6-digits for B2B supplies of goods and services for taxpayers with aggregate turnover less than Rs. 5 crores and above Rs. 5 crores respectively
These GST latest changes will benefit the micro and small businesses significantly, at the same time it has significant merits for financial institutions as well.
● Potentially lot more business will actively file their returns, thus increases the extent of GST data being available and that can be used by financial lenders in their assessment.
● With inclusion of HSN code, the lenders have better visibility of business product portfolio and concentration of revenue potential. This data will become relevant over time to create industrial and product level benchmarks.
● For this segment of businesses, large lender typically offers term loan than working capital, hence latency of filing may not have significant impact in assessment.
● For smaller banks and NBFC, the abundance of data will help them to assess their credit risk better and further advance financial inclusions.
Press Release - https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1661827
