Government announces GST Amnesty Scheme for Tax Payers: Key Highlights and Benefits

  • June 6, 2021
  • GST
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The 43rd GST council meeting was held on 28th May 2021. The council has announced GST Amnesty Scheme 2021 and provide big relief by providing waiver /reduced late fees and interest. Apart from reduction/rationalization in late fees and interest for pending returns, Due dates for filing of GSTR-1, GSTR 3B, IFF, GSTR-4, ITC-04, Cumulative application of rule 36(4), etc. has been extended.

Before moving ahead, let’s try to understand what exactly Amnesty Scheme is all about.

What is the Amnesty Scheme?

  • The word Amnesty is means a grace extended by the government to an association or classes of people, normally for a political sin, the act of a sovereign power by officially discharging particular classes of people who are subject to prosecution but have not yet been convicted.
  • The GST system came into practice back in 2017 and the Finance Ministry noted that, even by 2020, many businesses have ignored it and have remained non-compliant. The government wanted these businesses to register under GST and, to do so, they introduced the Amnesty Scheme.
  • For people who were liable but haven’t filed returns on time, the late fees pile up. Through the Amnesty Scheme, this late fee was waived to a large extent. So, the people who were earlier hesitant to file for GST could now register and file returns without worrying about the humongous late fees or penalties.

Amnesty under GST Law

  • The Government has announced an Amnesty scheme that aims to grant relief to taxpayers about the late fee for pending returns. This scheme will remain valid from 1st June 2021 to 31st August 2021. 
  • The 43rd GST Council decided to exempt duty on importing Covid-19 related items like hand sanitizers, face masks, gloves, PPE Kits, temperature scanners, other related medical equipment.
  • Also, an amnesty scheme for small and medium taxpayers to reduce the late fee burden has been introduced.
  • Taxpayers can now file pending returns without huge penalties, and they can avail the benefits of this GST Amnesty scheme with decreased late fees.

The original provisions under GST law regarding late fees without giving effect to the above scheme

  • The late fee for filing returns is Rs 25/- per day (CGST and SGST each), subject to a maximum of Rs 5000(each for CGST and SGST).  So total late fee for the delay was Rs 50/-  per day, subject to a maximum of Rs 10,000/- for each return. 
  • Sec 20(viii) of the IGST Act, 2017 eliminates late fees from its ambit. Therefore, there is no separate late fee levied under IGST Act, 2017.
  • However, a late fee is applicable under the UTGST Act, 2017, as per Section 21(ix), as the application of late fee has not been suspended therein.

Now we can conclude that late fees shall be applicable under CGST Act and SGST (Intra State supply) or UTGST (Intra Union Territory supply).

Relaxed Late Fee Payment

For GSTR 3B Relaxation in Late Fee
Nil Return (when there is no tax liability for the said period) Maximum Late fee is capped at Rs. 500/-  i.e., (Rs. 250- each for CGST & SGST) per return
When there is Tax liability for the said tax period     Maximum Late fee is capped at Rs.1,000/- i.e.(Rs. 500- each for CGST & SGST) per return

Time when you can avail GST Amnesty Scheme 2021

Return GSTR – 3B shall be filed between 1.06.2021 to 31st August 2021 to avail the benefit of the lowered rate of late fees. It implies that the pending GSTR 3B returns from July 2017 to April 2021 are required to be filed on or before 31st August 2021.

Government announces GST Amnesty Scheme for Tax Payers: Key Highlights and Benefits

Relaxation in Late fees for Return Filings of GSTR 3B and GSTR 1 (June 2021 onwards).

The late fee is being capped to reduce the burden of late fee on taxpayers, following are the details-

  1. Taxpayers having nil tax Liability are required to pay only Rs. 500/- (Rs. 250/- each for CGST & SGST) per return
  2. For Taxpayers with Tax Liability:
Taxpayers with an aggregate turnover in preceding FY up to Rs. 1.5 crores Rs. 2000/- (Rs. 1000/- each for CGST & SGST) per return
Taxpayers having aggregate turnover in preceding FY between Rs. 1.5 crores to Rs. 5 crores Rs. 5000/- (Rs. 2500/- each for CGST & SGST) per return
Taxpayers having aggregate turnover in preceding FY above Rs.  5 crores Rs. 10000/- (Rs. 5000/- each for CGST & SGST) per return

Relaxation in Late fees for filing of GSTR 4

Explanation of late fee leviable on account of delay in furnishing FORM GSTR-4 by composition taxpayers for proposed tax period i.e., FY 21-22 onwards.

Taxpayer Late fees
 Taxpayers having nil tax Liability (Nil Return) Rs. 500/- (Rs. 250/- each for CGST & SGST) per return
 Other Taxpayers
Rs. 2000/- (Rs. 1000/- each for CGST & SGST) per return  

Relaxation in Late fees for Return Filings of GSTR 7

Description of the late fee applicable on account of delay in filing return in FORM GSTR-7 by Tax deduction at Source for proposed tax periods i.e., June, 2021 onwards

The following table gives clarity about this relaxation-

Particulars Late fees
  Late Fee payable for delayed furnishing of Return in Form GSTR – 7    Rs. 50 Per day (Rs. 25/- each CGST & SGST) per return
  Maximum amount Capped
Rs. 2000/- (Rs. 1000/- each for CGST & SGST) per return  

Relaxation in availing of ITC under GST

Compliance-related relief, For GST Taxpayers, Rule 36(4) of CGST Rules restricting provisional ITC claims to 5% GSTR-2B in GSTR-3B is relaxed for April 2021.

The assessee can apply this cumulatively for April and 21st May while filing GSTR -3B for May 2021.

GST Return

Conclusion

The finance minister has introduced GST Amnesty Scheme to provide relief to the taxpayers regarding payment of late fees applicable on non-furnishing FORM GSTR-3B & GSTR 1 for the tax periods from July 2017 to April 2021. The lowered rate of the late fee will be applicable if GSTR-3B for these tax periods is filed between 1st June 2021 to 31st August 2021.

Also, relaxations are giving on GSTR 4 (return that has to be filed by a composition dealer) and GSTR 7(return to be filed by the persons who are required to deduct TDS (Tax deducted at source) under GST) and compliance to avail ITC are also relaxed.

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Neelansh Gupta is a dedicated Lawyer and professional having flair for reading & writing to keep himself updated with the latest economical developments. In a short span of 2 years as a professional he has worked on projects related to Drafting, IPR & Corporate laws which have given him diversity in work and a chance to blend his subject knowledge with its real time implementation, thus enhancing his skills.

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