prpri Ground Reality of GST Amnesty Scheme & Relaxation of Late Fees Ground Reality of GST Amnesty Scheme & Relaxation of Late Fees

Ground Reality of GST Amnesty Scheme & Relaxation of Late Fees as provided under GST in the 43rd GST Council Meeting.

Late Fee Amnesty Scheme for pending returns in FORM GSTR-3B for the tax period of July, 2017 to April, 2021.

The GST Council has notified Amnesty scheme to provide relief and a final opportunity to small taxpayers regarding late fee for pending GSTR 3B from July 2017 to April 2021. This scheme will remain valid from June 1, 2021 to August 31, 2021.

Existing Provision of Late Fee in CGST Act, 2017

Section 47(1) of the CGST Act, 2017 provides for the late fee for filing of returns , including GSTR-4 or GSTR-10, is Rs 100/- per day (each for CGST and SGST) subject to maximum of Rs 5000/-(each for CGST and SGST). Thus total late fee for delay was Rs 200 per day subject to maximum of Rs 10,000/- for each return.

Late Fees as per Amnesty Scheme

FORM GSTR-3B (JULY, 2017 TO APRIL, 2021)
Particulars Amount () Comment
Taxpayer having nil Liability  

500.00 (CGST+SGST)

• Late Fee Capped per Return,

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

 

For other taxpayer

 

1000.00 (CGST+SGST)

Before discussing the pros and cons of this scheme, let’s have a look on another relaxation given by the GST Council in the late fees for the GST Returns after expiration of this scheme.

RATIONALIZATION OF LATE FEE FOR PROSPECTIVE PERIODS: –

To reduce the burden of late fee on smaller taxpayers, the upper cap of late fees is being rationalized to align the late fee with the tax liability/turnover of the taxpayers on a prospective basis. Accordingly, the late fee for delay in furnishing of various returns has been capped as follows: –

FORM GSTR-3B & FORM GSTR-1 (PROSPECTIVE PERIOD)
Particulars Amount (₹) Comment
Nil tax liability in GSTR-3B or Nil Outward Supplies in GSTR-1 500.00 (CGST+SGST) ♦ Annual Aggregate Turnover (AATO)

♦ Late Fee Capped per Return

 

 

For other taxpayer
AATO in preceding year up to 1.5 crore 2000.00 (CGST+SGST)
AATO in preceding year between 1.5 crore to 5 crore 5000.00 (CGST+SGST)
AATO in preceding year above 5 crores 10000.00 (CGST+SGST)

 

FORM GSTR-4-COMPOSITION TAXPAYER (PROSPECTIVE PERIOD)
Particulars Amount (₹) Comment
Tax Liability is Nil in the return 500.00 (CGST+SGST) Late Fee Capped per Return
For other taxpayer 2000.00 (CGST+SGST)

 

FORM GSTR-7-TDS TAXPAYER (PROSPECTIVE PERIOD)
Particulars Amount (₹) Comment
Per Day 50.00 (CGST+SGST) Late Fee Capped per Return
Maximum Late Fees 2000.00 (CGST+SGST)

For instance:

1. XYZ Enterprises registered under GST on 01.11.2020 and having some business in November 2020 but having no business transaction since 01.12.2020 and he also failed to file the GST Returns since April 2020. Now, they wants to file all the pending returns with applicable late fees. Advise them on the applicable late fee for filing the pending returns.

Amnesty Scheme After Amnesty Scheme
Pending Returns Late Fees as per GST Amnesty Scheme 2021 (₹) Due Date Period of Delay if return filed on 01.09.2021 Applicable Late fee (Otherwise) (₹) *
November 2020 1000 24/12/2020 247 100* 247 = 24700 or 10000, Whichever is Less.
December 2020 500 24/01/2021 217 20*217 = 4340
January 2021 500 20/02/2021 191 20*191 = 3820
February 2021 500 20/03/2021 161 20*161 = 3220
March 2021 500 24/04/2021 127 20*127 = 2540
April 2021 500 04/07/2021 57 20*57 = 1140

Note: * The rationalization of late fee is applicable only for the Returns of prospective period (i.e., For April 2021 onwards) and there is no clarification issued yet on the applicability of reduced late fee on the returns for previous tax periods for which the GST Amnesty Scheme is applicable.

Accordingly, now the taxpayers who has not filed the returns since there registration can avail the opportunity of filing those pending returns with the reduced burden of late fee. Though this scheme is not in consonance with the existing provisions of GST Act and it is incomplete in itself in so many ways and few of them are:-

1. The ITC under Section 16(4) of CGST Act, 2017 is time barred and the time limit for claiming the ITC for the tax period July 2017 to March 2020 is expired. Accordingly, the taxpayer cannot claim the ITC for the period of July 2017 to March 2020 in any case as there is no such amendments or relaxations given in the provision of ITC.

2. Further, in this amnesty scheme, Late Fees is relaxed only on the filing of GSTR-3B and the Late Fees on GSTR-1 is still applicable.

3. The taxpayers having A.A.T.O. more than ₹ 5 Cr should file their pending returns within the date of this scheme as they will not get any benefit thereafter as the rationalization of late fee is not applicable on the businesses having A.A.T.O. of more than ₹ 5 Cr.

4. There is no refund/adjustment for the pending returns already filed with applicable late fees till date.

Author Remarks:-

Though it seems beneficial to the taxpayers who have not filed their returns and who wants to keep themselves complied with the requirements of law and to avoid any consequences of not filing the returns within due dates. But it doesn’t seem beneficial to the taxpayers having any tax liability and an ITC on purchases to be availed as they are already restricted under the provision of GST to avail the ITC beyond specified period and if they file the returns after availing this scheme, then they will be definitely face some other repercussion under the GST provision such as:-

  • Non-Compliance of Section 16(4) of the CGST Act, 2017,
  • Mismatch in the ITC claimed : Non-availability of ITC to Buyer due to non-filing of GSTR 1 by the Supplier,
  • If there is any mistake in the Invoices furnished in GSTR 1 for the period of July 2017 to March 2020, that can not be amended now due to Section 37 (3) of CGST Act, 2017,
  • and other related issues.

So, the GST Amnesty Scheme is magnificent from outside but when you dig it deep down, the actual reality comes forward as we discussed in this article and as per our remarks, this scheme needs to be more favorable for the taxpayers to actually give any benefit during this harsh time of pandemic and recession.

*****

Disclaimer:- The above information is purely and solely for informative purposes. This in no way should be construed to be any professional advice, as these are merely general information and our interpretations of the laws and the Act. Viewers are requested to consult us before taking any action based on our interpretations. Circulation of any information in our name without our permission is not allowed.

Author Bio

Qualification: CS
Company: Malkit Singh & Associates
Location: New Delhi, Delhi, India
Member Since: 14 Mar 2021 | Total Posts: 5
Practicing Company Secretary & a member of Institute of Company Secretaries of India. He has also obtained degree in Bachelor of Commerce (B.CoM) and also Registered as a GST Practitioner. View Full Profile

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3 Comments

  1. Nirav Shah says:

    Sir what about those assessees whose GSTIN is suspended by department due to non-filing and they have filed appeal. how to avail scheme

    1. CS Malkit Singh says:

      There is no clarity by the ministry on all such issues. But, as per our understanding you have to get your GSTIN revoked before availing this scheme, as the system will not allow you to file any return till the GSTIN is in suspended state.

      And for appeal case, you cannot avail this scheme until the appeal is disposed off and the order of appeal is in your favor. But, you can visit the department and present your case before them.

      For any other query, you may reach us on +91-9711975109.

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