Important Aspects from RTI reply received from CBIC- Rs 900 Crores collected as GST Late Fees
GST was launched on 1st July 2017 and termed as biggest tax reform in India after independence. Certain initial hiccups were expected in the implementation considering the mammoth data integration as GST has subsumed within itself 16 different taxes. The Migration of existing taxpayers registered under Central Excise and Service Tax was started from 7th January 2017 on GSTN. Thus effectively the common portal of GST is in use for nearly 16 months now.
Following is the analysis of Return filing of GSTR 3 B, 1 and 4 available on CBIC website under the head GST – Concept & Status (01-04-2018).
The above analysis is self-explanatory. Even Govt have sounded alert on low compliance ratios consistently. There were many occasions when the Portal was crashed and thrown glitches. Even High Courts have accepted the fact of glitches in many cases.
The basic features of the return mechanism in GST includes electronic filing of returns, uploading of invoice level information, auto-population of information relating to input tax credit from returns of supplier to that of recipient, invoice level information matching and auto-reversal of input tax credit in case of mismatch. The returns mechanism is designed to assist the taxpayer to file returns and avail ITC.
Under GST, a regular taxpayer needs to furnish monthly returns and one annual return. The GST Council has however recommended to ease the compliance requirements for small tax payers by allowing taxpayers with annual aggregate turnover up to Rs. 1.5 Crore to file details of outward supplies in FORM GSTR-1 on a quarterly basis and on monthly basis by taxpayers with annual aggregate turnover greater than Rs. 1.5 Crore. Further, GST Council has recommended to postpone the date of filing of Forms GSTR-2 and GSTR-3 for all normal tax payers, irrespective of turnover, till further announcements are made in this regard.
Revision of Returns: The mechanism of filing of revised returns for any correction of errors/ omissions has been done away with under GST. The rectification of errors/omissions is allowed in the return for subsequent period (s). The continuous change in mechanism of return filing by GSTN also ensured that in case of errors in data punching, the taxpayer will get stuck up and will not be able to file the return for current as well as subsequent period because unless the earlier return is filed portal did not allow to file subsequent month’s return. Further unless and until tax and late fees is paid, the return does not get uploaded and thus got the cycle of return filing to a standstill. The clarifications regarding stuck up of Return filing and consequent Amendment / corrections / rectification of errors were also made by CBEC (Now CBIC) vide Circular No. 26/26/2017-GST dated 29th December 2017.
To get further insight into this aspect, I have lodged an RTI with respect to collection of Late Fees and Interest on account of GST return filing so as to co-relate with the process of GST Return filing in vogue. I have received following communication from Principal Chief Controller of Account, Central Board of Excise & Customs with respect to same.
Interest on Late GST Payment:
An interest of 18 percent is levied on the late payment of taxes under the GST regime. The interest would be levied for the days for which tax was not paid after the due date.
Penalty (Late Fees) for non-filing of GST Returns:
In case a taxpayer does not file his/her return within the due dates, he/she shall have to pay a late fee of Rs. 200/- i.e. Rs.100/- for CGST and Rs.100/- for SGST per day (up to a maximum of Rs. 5,000/-) from the due date to the date when the returns are actually filed.
Note: In case of GSTR-3B,
Following initial observations can be drawn from the above RTI Reply received
1) The Office have written SGST is not accounted by them and hence Information with Regards to Late fees and Interest collection under SGST is not available in the Annexure.
2) However as the GST return is combined return under all the acts it can very well be assumed that the Late fees under SGST will be equal to CGST as both are to be paid as per relevant section. However the same is not correct as far as Interest is concerned because it depends upon the liability under particular act.
3) Thus following is the summary of collection of Late Fee and Interest for 8 month period July 2017 to February 2018.
|(RS In Crores)|
|SGST (Assumed as above as per Act and Return filing Process)||446.39||NA||NA|
If we consider interest under SGST as equal to or more than SGST, still it is clear that the amount of collection of Late Fees under GST is 4.5 times more than the amount of interest from taxpayers. This clearly shows that Taxpayers had initiation to pay tax and comply the provisions of law but the technical glitches held them back from fulfilling their duty of filing the return.
The continued problems faced by exporters to get refund and special drive to give those refund of exporters (lastly done by physical mode in end of March 2018) also justifies the many lacunae in the GSTN system that needs to be addressed on priority so that the system becomes seamless and taxpayer don’t have to bear the burnt in the form of Late Fees. The Industry faced the menace of working capital blockage and non-payment of interest as per provisions of Act.
Hope the above Information in RTI is useful for the fraternity, businesses, Industries and to govt also to take up the matter of further simplification of GST Return filing process so that the unnecessary non- compliance, late fees burden are taken care of.
The Author is a Practicing Chartered Accountant and regular contributor of taxation articles and other legal updates on various social media platforms.