GST: Compliance relaxations, late fee rationalisation to help small taxpayers

A series of compliance relaxations including late fee reductions and extended deadlines for return filing will help small taxpayers that have been impacted by the second wave of the Covid pandemic.

The Council Friday announced an amnesty scheme under which returns of the past tax periods from July, 2017 till April 2021 with no tax liability, filed between June 1, 2021 and August 31, 2021, will attract a late fee of Rs 250 per return, capped at Rs 500. The cap will be Rs 1,000 for other cases.

For monthly and quarterly returns to be filed in the future, the late fee has been capped at Rs 500 for returns with no tax liability. In case of turnover above Rs 1.5 crore, late fee has been capped at Rs 2,000 and from Rs 1.5 crore to Rs 5 crore turnover, the late fee has been capped at Rs 5,000.

Maximum late fee of Rs 10,000 has been recommended for turnover above Rs 5 crore. All recommendations of the Council will be ratified through notifications to be issued by the finance ministry.

“The recommendation to grant partial reduction and waiver of the late filing fee for specified tax periods together with a reduced rate of interest has come as a much-anticipated relief measure, especially in the backdrop of the pandemic and transitional issues faced due to the implementation of GST,” said Ajinkya Gunjan Mishra, partner at L&L Partners.

For taxpayers under composition scheme, for those with no tax liability, late fee has been capped at Rs 500 per return, and up to Rs 2,000 for other cases.

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Taxpayers requiring to deduct tax at source (TDS) will have to a pay late fee of Rs 50 per day, capped at Rs 2,000 per return.

“The decision to allow filing of returns by companies using Electronic Verification Code (EVC), instead of Digital Signature Certificate (DSC) till August 31, 2021 is a welcome move as employees are operating in a work from home environment and may not readily have access to DSC,” said Sandeep Jhunjhunwala, Partner, Nangia Andersen LLP.

A reduced rate of interest – at 9% – was also announced for delayed payment of taxes for the months of March 2021, April 2021 and May 2021.

Waiver from payment of interest is available for the first 15 days for the months of March and April 2021 for businesses with turnover up to Rs 5 crore, however, no such exemption is available for the month of May 2021 for businesses with an annual turnover more than Rs 5 crores.

Due dates for filing returns for May has been extended by 15 days, while deadline for taxpayers under composition scheme filing returns for FY21 has been extended to July 31. Filing of input tax credit for quarter ended March, 2021 has been extended to June 30.

Self-certification of reconciliation statement in GSTR-9C instead of a CA certificate from FY21 onwards will enable assessees to comply with compliance requirements on time, without going through tedious process of audit by independent CA, experts added.

The Council proposed retrospective amendment in section 50 of the CGST Act with effect from July 01, 2017, providing for payment of interest on net cash basis. “This is welcome measure and was overdue, considering numerous judicial precedents wherein courts have held that interest liability should arise on net cash liability,” said Vineet Nagla, partner at White & Brief Advocates.

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(The one-stop destination for MSME, ET RISE provides news, views and analysis around GST, Exports, Funding, Policy and small business management.)

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