The 40th GST Council meeting was held on June 12, 2020 through video conferencing under the chairmanship of Union Finance Minister Smt. Nirmala Sitharaman and other panel ministers. Brief updates of the GST Council Meeting and its analysis wherever necessary are provided below:

1) Reduction in late fee for past returns

Several taxpayers have failed to file GSTR-3B for the period July 2017 to January 2020. As a trade facilitation measure, the Council has recommended the following:

Sl.No Whether there exists any tax liability in a particular month Amount of late fee per return
1 No NIL
2 Yes Rs. 500/-

CONDITION:  The reduced rate of late fee would apply for all the GSTR-3B returns furnished between July 1, 2020 to September 30, 2020

2) Reduced interest of 9% to be levied in case of delay in furnishing of returns for the month of February, March and April 2020.

a) Background

In terms of Notification No. 31/2020-Central Tax dated April 3, 2020, class of registered persons having an aggregate turnover upto Rs. 5 crores in the preceding financial year were granted relief by way of conditional waiver of interest if GSTR-3B is filed within the date specified in the abovementioned notification. For ease of reference, particulars and conditions of notification are reproduced below:

Class of Registered persons Tax period Interest Rate Condition
Taxpayers having an aggregate turnover of more than Rs. 1.5 Crores and upto Rs. 5 Crores February and March 2020 NIL If GSTR-3B is furnished on or before June 29, 2020
April 2020 If GSTR-3B is furnished on or before June 30, 2020
Taxpayers having an aggregate turnover of upto Rs. 1.5 Crores February 2020 NIL If GSTR-3B is furnished on or before June 30, 2020
March 2020 If GSTR-3B is furnished on or before July 3, 2020
April 2020 If GSTR-3B is furnished on or before July 6, 2020

Hence, it is evident that interest would have been levied in case GSTR-3B is not furnished on or before specified due dates.

b) Recommendation of GST Council

Vide 40th GST Council Meeting, it is recommended that where the returns are not filed before the specified due dates, reduced rate of interest of 9% would be charge till September 30, 2020

c) Analysis

Timely recommendations by GST Council may push the taxpayers to file the returns before specified due date in order to avoid the interest exposure.

Further, it is pertinent to note that the Press release is silent regarding late fee in case returns are not filed on or before the specified date.  In terms of Notification No. 32/2020 – Central Tax dated April 3, 2020, conditional late fee waiver was prescribed for the abovementioned class of taxpayers if returns are filed on or before specified dates.

Interestingly, press release is silent regarding levy of late fee if returns are filed after specified due dates. This would bring to the conclusion that late fee for delay furnishing of GSTR-3B for the month of February, March and April 2020 would be levied.

3) Relief for small taxpayers in filing of GSTR-3B for subsequent tax periods

Class of Taxpayers Tax period Interest Late Fee Condition
Taxpayers having an aggregate turnover of upto Rs. 1.5 Crores May 2020, June 2020 and July 2020 NIL NIL GSTR-3B is furnished by September 2020*

*Staggered due dates will be notified by Govt.

4) One-time extension in period for seeking revocation of cancellation of registration

To facilitate taxpayers who could not get their cancelled GST registrations restored in time, an opportunity is being provided for filing of application for revocation of cancellation of registration up to 30.09.2020, in all cases where registrations have been cancelled till 12.06.2020

Point to be Noted:

In 39th GST Council Meeting, it was recommended that the one-time extension be granted till June 30, 2020 where registration have been cancelled till March 14, 2020. Interestingly, the said recommendations of 39th GST Council Meeting is not notified yet.

Will the revenue authorities allow availment of input tax credit for FY 2017-18, FY 2018-19 in Recommendation No.1 and No.4? Clearly, opens pandora box for another round of litigation. Above recommendation along with specific guidelines would provide ease to the life of concerned taxpayers.

All the above-mentioned recommendations would be given effect through relevant Circulars/Notifications which alone shall have the force of law.

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5 Comments

  1. RAJNIKANT says:

    Returns for Feb’20 and Mar’20 is to be filed on or before 30th June 2020 and benefit for filing GSTR-3B for the period from Jul’17 to Jan’20 is given if returns are filed between 1st July 2020 to 30 September 2020. Without filing earlier period return one can not file return for Feb’20 onward. In other word penalty for Feb’20 onward payable in any case.

    1. Hemal Makwana says:

      Sir, agree with the scenario which you have presented. However, I think no penalty will be levied. Reduced rate of interest will be levied for returns for the month of February and March 2020. Further, late fees will be charged for these two months.

  2. saseendran says:

    Pl, clear my doubt. It’s welcome to waive LF from July 2017 to Jan 2000. But what’s about LF for 2017-18 Annual return(9C). For taxpayers who files 3B now, can only file 9C after submitting all pending returns. Then , whether 3B late fee for 207-18 annual return also be waived?

    1. Hemal Makwana says:

      So far, no waiver of late fee for delay in furnishing GSTR-9/GSTR-9C has been announced by Govt.
      However, it was recommended in 39th GST Council Meeting that late fee not to be levied in delay filing of GSTR-9/GSTR-9C for FY 2017-18 and FY 2018-19 for taxpayers with aggregate turnover below 2 crores, interestingly, not yet notified. (filing of GSTR-9/9C was earlier made optional for them)

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