This year's compensation cess collected amounting to Rs 20,000 crores will be disbursed to the States tonight, Finance Minister Nirmala Sitharaman said on Monday after the 42nd GST Council meeting. She said Rs 24,000 crores of IGST to be released to the States that had received less earlier, will be disbursed by the end of next week.
The minister said the proposal to extend GST compensation cess levy beyond 2022 was cleared by the GST Council.
"Levy of Compensation Cess to be extended beyond the transition period of five years i.e.beyond June, 2022, for such period as may be required to meet the revenue gap," an official statement said.
Under the GST structure, taxes are levied under 5, 12, 18 and 28 per cent slabs. On top of the highest tax slab, a cess is levied on luxury, sin and demerit goods and the proceeds from the same are used to compensate states for any revenue loss.
In the other announcement, Revenue Secretary Ajay Bhushan Pandey said from January 1 onwards, taxpayers which fall in the lower tax bracket will not have to file monthly returns and will only file quarterly returns
However, because states need money every month, taxpayers can make a "payment to challan" of 35% of tax paid in the previous month in the initial two months of a quarter and then pay the remaining in the third month, Bhushan Pnadey added.
This will reduce the compliance burden on taxpayers who will now need to file just 8 returns instead of 24 in the entire assessment year.
The Finance Ministry further informed that firms and companies with turnover less than Rs 5 crore can now file quarterly returns rather than a monthly basis, noting that it "will be a major relief to small taxpayers"
"From the first of January onwards, the taxpayers whose annual turnover is less than Rs 5 crores will not be required to file monthly returns i.e GSTR 3B and GSTR1. They will only file quarterly returns," Bhushan Pandey said.