GST Council held its 43rd meeting on 28th May 2021 and in this meeting GST Council recommended various changes relating to change in GST rates and changes related to GST law and procedures but in this article we will discuss amnesty scheme for GSTR-3B, rationalization of late fee and waiver of late fee for the tax period March 2021 and April 2021.

COMMENTARY ON AMNESTY SCHEME

 GST Council has come out with amnesty scheme to provide relief to registered persons regarding late fee for pending returns from tax periods July 2017 to April 2021. This scheme is aim to provide window to non-filers of GSTR-3B now registered person who has made in default in filing GSTR-3B of any tax period or periods from July 2017 to April 2021 then maximum late fee for single tax period i.e. Monthly GSTR-3B upto December 2020 tax period and monthly or quarterly as the case may be from January 2021 because first quarterly GSTR-3B was for quarter January 2021 to March 2021.

At present in case where registered person has tax liability of even Rs.1 then late fee is Rs.25 per day under CGST Act, 2017 subject to maximum of Rs.5000 and Rs.25 per day under SGST/UTGST Act, 2017 subject to maximum of Rs.5000 i.e. Rs.50 per day subject to maximum of Rs.10,000 (this maximum cap of Rs.10,000 was a draconian provision for MSME sector if there is default in filing of return ).

(Refer section 47 of CGST Act, 2017 and SGST/UTGST Act, 2017 read with section 128).

GST COUNCIL RECOMMENDATION OR DECISION

Where registered person is having NIL TAX LIABILITY (where there is no outward supply or exempt outward supply or nil rated supply resulting into no tax liability) for any tax period then maximum late fee will be Rs.500.

Where registered person has any tax liability i.e. output tax of even Rs.1 then maximum late fee will be Rs.1000 for any tax period.

To avail amnesty scheme registered person must file pending GSTR-3B (from July 2017 to April 2021) between 1st June 2021 to 31st August 2021 i.e last date to avail amnesty scheme is 31st August 2021.

You must remember one more thing there will be no late fee for March 21 tax period GSTR-3B (monthly or quarterly as the case may be) if GSTR-3B is filed within 60 days after expiry of due date (as may be applicable to registered person i.e. monthly or quarterly GSTR-3B filer) of GSTR-3B for March 2021 and for April 2021 such waiver of late fee is available if GSTR-3B for April 2021 (monthly GSTR-3B filer) is filed within 45 days after expiry of due date.

Soon notifications will be issued to give effect to above recommendation.

COMMENTARY ON RATIONALISATION OF LATE FEE UNDER SECTION 47 OF CGST ACT, 2017

Relaxation for registered persons having regular scheme under GST

AS I discussed above, there was long standing demand from the industry and professionals to lower the late fee in case of small taxpayers but government did no pay attention on this matter for almost 4 years but in 43rd meeting of GSTC, there is recommendation to fix lower maximum late fee for small taxpayer thereby giving relief to small taxpayers and for the purpose of levying late fee turnover is criteria and finally lower maximum cap of late fee for small taxpayer and now maximum late fee will be as follows

1. For registered persons having Nil GSTR-3B or GSTR-1 – maximum late fee will be Rs.500 (Rs.250 under CGST Act, 2017 + Rs.250 under SGST/UTGST Act, 2017) therefore you can say late fee will Rs.20 per day or Rs.2000 whichever is lower

2. For other registered persons i.e. having tax liability – for GSTR-3B or GSTR-1

I. If Annual aggregate turnover in preceding year (it must be financial year but Press release has mentioned only preceding year instead of preceding financial year and wait for becoming this proposal into law for more clarity) is upto Rs.1.5 crore – maximum late fee will be Rs.2000 (1000 CGST+1000 SGST) therefore you can say late fee will Rs.50 per day or Rs.2000 whichever is lower

II. If Annual aggregate turnover in preceding year (it must be financial year but Press release has mentioned only preceding year instead of preceding financial year and wait for becoming this proposal into law for more clarity) is more than 1.5 crore but upto Rs.5 crore (though press release has mentioned ‘between Rs 1.5 crore to 5 crore but it must more than 1.5 core but upto 5 crore and wait for becoming this recommendation into law) – maximum late fee will be Rs.5000(2500 CGST+2500 SGST) therefore you can say late fee will Rs.50 per day or Rs.5000 whichever is lower

III. If Annual aggregate turnover in preceding year (it must be financial year but Press release has mentioned only preceding year instead of preceding financial year and wait for becoming this proposal into law for more clarity) is more than Rs.5 crore maximum late fee will be Rs.10000(5000 CGST+ 5000 SGST) therefore you can say late fee will Rs.50 per day or Rs.10000 whichever is lower

There will be no change in per day late fee but relief has been given to small taxpayers by fixing lower maximum late fee for small taxpayers.

 LATE FEE RELAXATION FOR GSTR-4

In case of composition taxpayers also, maximum late fee will be Rs. 500 (Rs.250 CGST + Rs.250 SGST) if there is NIL TAX LIABILTY and in case of other composition taxpayers, maximum late fee will be Rs.2000 (Rs.1000 CGST + Rs.1000 SGST).

LATE FEE RELAXATION FOR TDS RETURN FILERS UNDER GST

Late fee for belated GSTR-7 will be reduced to Rs. 50 per day (Rs.25 CGST + Rs.25 SGST) and maximum late fee will be capped at Rs.2000 (1000 CGST+1000 SGST) therefore you can say late fee will Rs.50 per day or Rs.2000 whichever is lower

For MAY 2021 tax period GSTR-3B

Late fee will be waived if GSTR-3B for May 2021 (only monthly GSTR-3B filers) is filed within 15 days after due date of furnishing GSTR-3B

There is no change recommended in late fee on per day basis i.e. same for both small taxpayer and large taxpayer but relaxation has been provided in respect of maximum late fee i.e. upper cap limit of late fee for small taxpayers.

All above recommendation of GST Council regarding rationalization of late fee will be given effect for future tax period and wait for notification.

For details refer press release issued on 28th May 2021.

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Disclaimer – Author has exercised utmost care while writing this article, but still this article may contain some error or mistake and no part of this article/writing should be construed or considered as any advice or consultancy whether professional or otherwise.

Author may be reached at [email protected] or [email protected]

Author Bio

Qualification: CA in Practice
Company: KARACT FILINGS
Location: New Delhi, Delhi, India
Member Since: 26 Jan 2018 | Total Posts: 30
Chartered Accountant having more than 6.5 years of very rich experience in the field of GST, Custom, Income-tax, Company law, LLP law, Corporate law, pre-GST regime indirect tax laws (VAT, Service tax,, Excise law etc.), FCRA, FEMA, Accounting, Financial reporting, Ind-AS, IFRS, stock market etc. View Full Profile

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