Update on the Changes Notified after the 43rd GST Council Meeting

1. Levy of interest on the net tax dues

Vide Sec. 112 of the Finance Act, 2021 a proviso has been inserted u/s 50(1) of the CGST Act, 2017 to provide for the levy the interest for the delay in making the payment of the tax on the net tax dues (i.e. tax dues after adjusting the available ITC) in situations where such tax dues are declared in the returns filed after the due date (except where the returns are filed after the commencement of proceedings u/s 73 or 74).

The aforesaid amendment has been made applicable retrospectively w.e.f 01.07.2017 (i.e. from inception). Now vide Notification No. 16/2021 – Central Tax dt. 01.06.2021 the said amendment shall come into effect from 01.06.2021. In other words, the retrospective amendment has been operationalized now.

B. Amnesty Scheme to provide relief to taxpayers regarding the late fee for pending returns

Vide Notification No. 19/2021 – Central Tax dt. 01.06.2021 an amnesty scheme has been introduced by way of capping the late fees for non-furnishing FORM GSTR 3B for the tax periods from July 2017 to April 2021 as under:

Taxpayer Maximum late fees/return
Nil liability Rs 500/- (Rs. 250/- each for CGST & SGST)
Other than nil liability Rs 1000/- (Rs. 500/- each for CGST & SGST)

The reduced rate of the late fee would apply if GSTR-3B returns for these tax periods are furnished between 01.06.2021 to 31.08.2021.

Please also note that the amnesty scheme does not extend to the pending GSTR 1 for the given tax periods.

C. Rationalization of Late Fees – Now onwards

VideNotification No. 20/2021 – Central Tax dt. 01.06.2021, Notification No. 21/2021 – Central Tax dt. 01.06.2021 & Notification No. 22/2021 – Central Tax dt. 01.06.2021 the quantum of applicable late fees has been rationalized as under:

Type of filing Nature Maximum late fees/return
GSTR-1 (June 2021 onwards) Nil Outward supply Rs. 500 (250+250)
GSTR-3B (June 2021 onwards) Nil Liability Rs. 500 (250+250)
GSTR-1/ GSTR-3B (other than nil) (June 2021 onwards) Aggregate Turnover of preceding FY less than Rs. 1.5 cr Rs. 2,000 (1000+1000)
Aggregate Turnover of preceding FY more than Rs. 1.5 cr but less than Rs 5 cr Rs. 5,000 (2500+2500)
Aggregate Turnover of preceding FY more than Rs. 5 cr Rs. 10,000 (5000+5000)
GSTR-4 (FY 2021-22 onwards) Nil liability Rs. 500 (250+250)
Other than nil liability Rs. 2,000 (1000+1000)
GSTR-7 (June 2021 onwards) TDS Returns [late fees -Rs. 50/day] Rs. 2,000 (1000+1000)

D. GSTR 3B – Reduction in the rate of interest & late fees

Vide Notification No. 18/2021 – Central Tax dt. 01.06.2021, Notification No. 19/2021 – Central Tax dt. 01.06.2016 and Notification No. 02/2021 – Integrated Tax dt. 01.06.2021 the reduction in the rate of interest and waiver of late fees for the tax periods of March 21, April 21 & May 21 shall be as under:

Taxpayer Applicable interest Tax period Late fees
Mar-21 Apr-21 May-21 Mar-21 Apr-21 May-21
Turnover > 5 crores in the preceding FY 9% Till 5th May Till 4th June Till 5th July Late fees waiver till 5th May Late fees waiver till 4th June. Late fees waiver till 5th July
18% After 5th May After 4th June After 5th July Late fees capped at Rs. 20/50 per day after 5th May (subject to amnesty scheme discussed at (B) above) Late fees capped at Rs. 20/50 per day (after 4th June (subject to amnesty scheme discussed at (B) above) Late fees capped at Rs. 20/50 per day after 5th July
Turnover <= 5 crores in the preceding FY Nil Till 5th May Till 4th June Till 5th July Late fees waiver till 19th June Late fees waiver till 4th July Late fees waiver till 20th July
9% After 5th May till 19th June After 4th June till 4th July After 5th July till 20th July
18% After 19th June After 4th July After 20th July Late fees capped at Rs. 20/50 per day after 19th June (subject to amnesty scheme discussed at (B) above) Late fees capped at Rs. 20/50 per day after 4th July (subject to amnesty scheme discussed at (B) above) Late fees capped at Rs. 20/50 per day after 20th July
QRMP Scheme (Jan – Mar) – Type-A States Nil Till 7th May Till 9th June Till 10th July Late fees waiver till 21st June Not applicable Not applicable
9% After 7th May till 21th June After 9th June till 9th July After 10th July till 25th July
18% After 21st June After 9th July After 25th July Late fees capped at Rs. 20/50  per day after 21st June (subject to amnesty scheme discussed at (B) above)
QRMP Scheme (Jan – Mar) – Type-B States Nil Till 9th May Till 9th June Till 10th July Late fees waiver till 23rd June Not applicable Not applicable
9% After 9th May till 23rd June After 9th June till 9th July After 10th July till 25th July
18% After 23rd June After 9th July After 25th July Late fees capped at Rs. 20/50  per day after 23rd June (subject to amnesty scheme discussed at (B) above)

It appears that the overall capping of the late fees for the tax period of May 2021 under Amnesty Scheme has not been done since it is not covered under any of the notifications issued. Therefore general cap of Rs. 5,000/- shall apply. If the same is due to oversight, we can expect an amendment on the same soon.

E. GSTR 1 – Due date extension

 Vide Notification No. 17/2021 – Central Tax dt. 01.06.2021 the due date for filing of GSTR 1 has been extended as under:

Taxpayer Tax period
Apr-21 May-21
Turnover > 5 crores in the preceding FY No late fees till 26th May. Thereafter late fees capped at Rs. 20/50 per day. No late fees till 26th June. Thereafter late fees capped at Rs. 20/50 per day.
Turnover <= 5 crores in the preceding FY

F. Invoice Furnishing Facility (IFF) – Due date extension

Vide Notification No. 27/2021 – Central Tax dt. 01.06.2021 the IFF (invoice furnishing facility) for taxpayers under the QRMP scheme shall be extended as under:

Taxpayer Tax period
Apr-21 May-21
All States Till 28th May Till 28th June

G. Composition taxpayers – Relief in the rate of interest

Vide Notification No. 18/2021 – Central Tax dt. 01.06.2021, the reduction in the rate of interest for the composition taxpayers shall be as under:

Taxpayer Rate of Interest January -March 2021
Composition (CMP 08) Nil Till 3rd May
9% After 3rd May till 18th June
18% After 18th June

H. GSTR 4 – Due date extension

Vide Notification No. 25/2021 – Central Tax dt. 01.06.2021 the due date for filing GSTR 4 has been extended as under:

Taxpayer FY 2020-21
Composition Extended till 31st July 2021

I. ITC 04 – Due date extension

Vide Notification No. 26/2021 – CT dt. 01.06.2021 the due date for filing ITC 04 (in respect of goods dispatched to a job worker or received from a job worker) for the period from 1st January 2021 to 31st March 2021 has been extended as under:

Taxpayer Jan – Mar 21
All taxpayers Extended till 30th June 2021

J. RULE 36(4) – 5% cap in ITC availment

Vide Notification No. 27/2021 – Central Tax dt. 01.06.2021 the restrictions for availing the ITC under Rule 36(4) shall apply cumulatively as under:

Taxpayer Tax period
April, May & June 2021
All taxpayers Cumulative effect to be given in GSTR 3B for June 2021

K. E-INVOICING

Vide Notification No. 23/2021 – Central Tax dt. 01.06.2021 Government department & local authority has been exempted from the requirement of issuing E-invoice irrespective of the aggregate turnover.

L. ELECTRONIC VERIFICATION CODE (EVC)

Vide Notification No. 27/2021 – Central Tax dt. 01.06.2021, Companies have been permitted to furnish the return under section 39 in FORM GSTR-3B and the details of outward supplies under section 37 in FORM GSTR-1 or using invoice furnishing facility, verified through electronic verification code (EVC) from the 27th April 2021 till 31st August 2021.

M. OTHER RELAXATIONS

Vide Notification No. 24/2021 – CT dt. 01.06.2021 the time limit for completion or compliance of any action, by any authority or by any person which falls due during the period from the 15th April 2021 to the 29th June 2021 shall be extended up to the 30th June 2021. However, the said extension shall not apply to:

a) Chapter IV (time and value of supply)

b) Sub-section (3) of section 10, sections 25, 27, 31, 37, 47, 50, 69, 90, 122, 129 (crossing the limits under composition scheme, registration, issuing the tax invoice, GSTR 1, late fees, interest, e-way bill, penalties) – please note the relaxations in terms of due dates/interest/late fees discussed earlier.

c) Section 39, except sub-section (3), (4) and (5) (GSTR 3B) – please note the relaxations in terms of due dates/interest/late fees discussed earlier.

d) Section 68, in so far as e-way bill is concerned

e) Rules made under the aforesaid provisions

However, the time limit for verification of the registration application by the authorities which falls due during the period from the 1st May 2021 to the 30th June 2021 shall be extended up to the 15th July 2021.

Also in cases where a notice has been issued for rejection of refund claim, in full or in part and the time limit to issue the order falls due from 15th April 2021 to 29th June 2021 the said time limit shall be extended to fifteen days after the receipt of the reply to the notice from the registered person or 30th June 2021, whichever is later.

It may also be noted that Hon’ble Supreme Court suo-moto vide Miscellaneous Application No. 665/2021 in SMW(C) No. 3/2020 has extended the period of limitation until further orders in respect of the filing of petitions/ applications/ suits/ appeals/ all other proceedings, irrespective of the period of limitation prescribed under the general or special laws.

(Views are strictly personal)

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