The Goods and Services Tax Council, led by finance minister Nirmala Sitharaman on Friday introduced more stringent norms to check tax evasion and extended the tenure of the National Anti-Profiteering Authority (NAA) by two years to November 2021.

The federal indirect tax body, at its first meeting in the second term of the Prime Minister Narendra Modi administration, also decided that Aadhaar-based GST identification will now be sufficient for GST registration.

Aadhaar-based registration will not only simplify the process but also improve ease of doing business, as the entities will not be required to submit any other document to enrol, the Council said.

Besides, it extended the deadline for filing GST returns for fiscal year 2018 by two months till the end of August from the earlier deadline of 30 June.

As part of its anti-tax evasion measures, the Council said that if businesses and merchants guilty of pocketing the benefits of tax cuts meant for consumers do not return the amount amassed illegally within 30 days, they will have to pay a 10% penalty of the profiteered amount. They have to return the entire amount to the consumer or deposit the money in the consumers’ welfare funds. Earlier, businesses had to pay a flat rate of 25,000 as penalty.

Despite demands of tax cuts from the industry, the Council focused on anti-evasion measures and simplification of rules. Proposals to slash tax rates on electric vehicles, battery chargers and leasing of electric vehicles were referred to the fitment committee for consideration, revenue secretary Ajay Bhushan Pandey said. On taxation of lotteries, the Council decided to seek the attorney general’s view.

The focus of the first GSTC meeting under the new government indicates that the centre is keen to iron out gaps in GST implementation, while curbing tax evasion.

Sitharaman expressed satisfaction with the proceedings of her first GST Council meeting. “The environment was very conducive and meaningful discussions happened, absolutely to the point. There was solid understanding of the issues across the board."

Pandey, who briefed reporters on the specific aspects, said the GST Council has in principle cleared an electronic invoicing mechanism for business-to-business transactions through a designated official portal, which will also act as the tax return platform. He said the earlier decision to allow quarterly filing of returns for businesses with up to 5 crore in sales has now been built into the statutes. They, however, have to file taxes on a monthly basis. The new return forms will be available for big businesses to use on a trial basis for three months from July. It should become the norm from January 2020.

The Council also cleared changes in the GST law announced earlier, including the decision to raise the GST registration threshold from 20 lakh to 40 lakh.

Multiplexes will also have to issue an electronic tax invoice to improve transparency in ticketing and tax compliance.

Experts said the imposition of higher penalty for profiteering was a tough measure, considering the absence of detailed guidelines on price behaviour. “Now that the Council has approved the extension of the NAA by two years, one would expect the government to define the rules as to what constitutes profiteering. This is imperative to reduce potential interpretational disputes," said R. Muralidharan, senior director, Deloitte India.

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