India’s Goods and Services Tax (GST) Council has recommended extending the levy of compensation cess beyond the transition period of five years, i.e., beyond June 2022, for a period needed to meet the revenue gap and suggested revised requirement for declaring harmonised system nomenclature (HSN) codes for goods and services accounting codes (SAC) for services in invoices and in the GST returns form beginning April 1 next year.
As a further step towards reducing the compliance burden, particularly on small taxpayers having aggregate annual turnover of less than ₹5 crore, the council’s earlier recommendation of allowing filing of returns on a quarterly basis with monthly payments by such taxpayers should be implemented with effect from January 1 next year, it was recommended at the the 42nd GST Council meet held virtually recently.
Such quarterly taxpayers would, for the first two months of the quarter, have an option to pay 35 per cent of the net cash tax liability of the last quarter using an auto generated challan, according to an official release.
The HSN/SAC code will be six digits for supplies of both goods and services for taxpayers with an aggregate annual turnover above ₹5 crore, while those will be of 4 digits for business-to-business supplies of both goods and services for taxpayers with an aggregate annual turnover of up to ₹5 crore.
The government will have power to notify eight-digit HSN codes on notified class of supplies by all taxpayers, the meeting recommended.