The 57th meeting of the GST Council has proposed a series of measures aimed at improving ease of doing business, including making the closure of GST registrations automatic in stages, beginning with smaller
taxpayers.
Under the proposed changes, the final return will become part of the closure application instead of being a separate step. The Council has also proposed restoring registrations that were suspended or cancelled because of a missing return or missing bank details once the taxpayer completes the required compliance.
The measures were outlined in the Council’s note on the outcomes of its meeting in New Delhi.
Business closure to be automated
The GST Council has proposed that business closure will be automated in stages, with smaller taxpayers covered first. The Council said around 90 per cent of taxpayers seeking cancellation have never passed on credit above Rs 2.5 lakh in any month. It said the revenue risk in automating their closure is therefore low.
The final return will also form part of the closure application. This means taxpayers will not have to complete it as a separate step after applying for closure.
The Council has also proposed a mechanism to restore GST registrations that have been suspended or cancelled because of a missing return or missing bank details.
Where the taxpayer completes the required compliance, the system will restore the registration.
Small taxpayers get simpler filing option
The Council has also approved in principle an optional scheme for the smallest taxpayers. Under the proposed scheme, a taxpayer with turnover of up to Rs 5 crore who supplies only to consumers will be able to file a return once a year and pay tax quarterly.
According to the Council’s note, an average of 16.85 lakh taxpayers out of 1.05 crore active taxpayers report only such supplies.
Of these, 16.66 lakh, or 99 per cent, have turnover below Rs 5 crore. Together, these taxpayers account for less than 1 per cent of the tax liability reported under GST.
The detailed framework and the amendments required for the scheme will be placed before the GST Council at its next meeting.
Fewer checks for goods in transit
The Council has also proposed changes to the way goods moving between states are inspected. A vehicle may be stopped only on the basis of specific intelligence. The decision to stop it must be authorised in advance by an officer not below the rank of Joint Commissioner.
Only the state from which the goods started and the destination state will be able to inspect the goods being transported. States along the route will not be allowed to stop the conveyance.
Under the earlier system, a consignment crossing five states could be checked in each of them. Under the proposed change, it will be checked only at the origin and destination points.
The required document will continue to be needed and will still be matched in the system. The Council said the change is that a physical check will follow information rather than precede it.
GST enforcement rules also eased
The Council has proposed removing the power of arrest under GST. The prosecution threshold will rise from Rs 1 crore to Rs 5 crore.
The minimum punishment will also be removed, with the punishment, whether a fine, imprisonment or both, left to judicial discretion in every case.
The general penalty, applicable where no specific penalty is provided, will be reduced from Rs 25,000 to Rs 10,000.
The Council said a taxpayer who files late, makes a mistake or falls behind on payment will face recovery, interest and a proportionate penalty, “and nothing beyond that”.
Why the changes are possible now
The Council said the GST system can now match seller and buyer invoices and identify fake credit when it arises. This capability was not available when the law was framed.
“Enforcement can now rest on detection rather than on deterrence,” the Council’s note said.
