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GST Amnesty Scheme

Updated on:  

08 min read

The GST Amnesty Scheme has been introduced once again by the government to provide relief to taxpayers who missed filing GSTR-3B for the previous tax periods. In this article, get complete details of the applicability, benefit, and working of this scheme with the latest updates. Also, learn about the late fee relief, the issues that still stand unresolved and possible solutions.

Latest updates on GSTR-3B

29th August 2021
1) Time limit to avail GST Amnesty Scheme extended up to 30th November 2021. It continues to apply for GSTR-3B from July 2017 up to April 2021 via CGST notification number 33/2021 dated 29th August 2021.
2) Taxpayers can get extended time up to 30th September 2021 to revoke cancelled GST registration if the last date for the same falls between 1st March 2020 and 31st August 2021. It applies if the GST registration is cancelled under Section 29(2) clause (b) or (c) of the CGST Act via CGST notification number 34/2021 dated 29th August 2021.
3) Company taxpayers can continue filing GSTR-1 and GSTR-3B using EVC or DSC up to 31st October 2021 via the CGST notification number 32/2021 dated 29th August 2021.

26th August 2021
From 1st September 2021, taxpayers will not be able to file GSTR-1 or use the IFF for August 2021 on the GST portal if they have pending GSTR-3B filings. It applies if GSTR-3B is pending for the past two months till July 2021 (monthly filer) or for the last quarter ending 30th June 2021 (quarterly filer), as per CGST Rule 59(6).

28th May 2021
The GST Council recommended in its 43rd meeting the following:
1) The much-awaited GST amnesty scheme was given a go-ahead. As per the announcement, those taxpayers who haven’t filed GSTR-3B for any earlier tax periods between July 2017 to April 2021 can file now between 1st June 2021 up to 31st August 2021 with a reduced maximum late fee as follows:
(a) Maximum late fee has been capped at a maximum of Rs 500 per return (i.e Rs. 250/- each for CGST & SGST) in case of nil GSTR-3B filing
(b) Maximum late fee is Rs 1000 per return ( i.e Rs. 500/- each for CGST & SGST) for other taxpayers
2) Late fee has been rationalised for future tax periods in case of GSTR-3B, as follows:
(a) In case of nil GSTR-3B filing, the maximum late fee charged shall be capped at Rs.500 per return (i.e Rs. 250/- each for CGST & SGST).
(b) In GSTR-1 and GSTR-3B other than nil filing, maximum late fee is fixed based on annual turnover slab, as follows:
(i) If the annual turnover in the previous financial year is upto Rs.1.5 crore then the late fee of maximum Rs 2,000 per return can only be charged (i.e Rs.1000 each for CGST and SGST).
(ii) If the turnover ranges between Rs.1.5 crore and Rs.5 crore then the maximum late fee of Rs.5,000 per return can only be charged (i.e Rs. 2500 each for CGST and SGST).
(iii) If the turnover is more than Rs.5 crore then late fee of maximum Rs.10,000 (i.e Rs. 5000 per CGST and SGST) can be charged.
3) Rule 36(4) of the CGST Rules will apply cumulatively from April to June 2021 while filing GSTR-3B for the tax period of June 2021. It means that one can provisionally claim ITC even if it does not appear in GSTR-2B in their GSTR-3B for April 2021 and May 2021.
4) Companies that are GST taxpayers have been given permission to authenticate returns using EVC instead of digital signature up to 31st August 2021.
5) The interest and late fee relief has been extended for a further period. Get the complete list in our article 43rd GST Council meeting Outcome.

1st May 2021
(1) The CGST Rule 36(4) restricting provisional ITC claims to 5% of GSTR-2B in GSTR-3B is relaxed for April 2021. The taxpayer can apply this rule cumulatively for both April and May while GSTR-3B for May 2021.

(2) The interest and late fee charged for late filing of GSTR-3B have been relaxed as follows:
(a) Turnover is more than Rs.5 crore in the preceding financial year and GSTR-3B is filed on a monthly basis, interest and late fee are relaxed/waived off for April and May 2021 (Due date: 20th May or 20th June) as follows:
Interest reduced to 9% for filing on or before 5th May (4th June), but charged at 18% thereafter. No late fee up to 5th May (4th June).

(b) Turnover is up to Rs.5 crore in the preceding financial year and GSTR-3B is filed on a monthly basis, interest and late fee are relaxed/waived off for April and May 2021 (Due date: 20th May or 20th June) as follows:
No interest for filing on or before 5th May (4th June), interest reduced to 9% for filing between 6th May (5th June) and 20th May (19th June), but charged at 18% thereafter. No late fee up to 20th May (19th June).

(c) Turnover is up to Rs.5 crore in the preceding financial year and GSTR-3B is filed on a quarterly basis, interest and late fee are relaxed/waived off for Jan-Mar 2021 (Due date: 22nd/24th April) as follows:
No interest for filing on or before 7th May (9th May), interest reduced to 9% between 8th May (10th May) and 21st May (23rd May), but charged at 18% thereafter. No late fee up to 21st May (23rd May).

What is Meant by the GST Amnesty Scheme?

The GST Amnesty Scheme was first notified to cover periods from July 2017 up to September 2018. A one-time extension to the time limit was provided then. Taxpayers could file these pending returns on or before 31st March 2019.

Back in early 2020, several tax professionals and industry leaders urged the government to reopen the GST amnesty scheme for several months due to the COVID pandemic. The government finally acceded to their request. 

CBIC implemented the GST Amnesty Scheme for the second time through a notification dated 1st June 2021. It applies to all the pending GSTR-3B returns of previous tax periods between July 2017 and April 2021. 

Validity of the GST Amnesty Scheme 2021

As per the latest Central Tax notification number 33/2021 issued on 29th August 2021, the validity of the GST amnesty scheme stands extended up to 30th November 2021 from the earlier deadline of 31st August 2021. It means that taxpayers who have pending GSTR-3B between July 2017 and April 2021, can file such returns on or before 30th November 2021 with a reduced maximum late fee.

Previously, as per the CBIC’s latest Central Tax notification number 19/2021 issued on 1st June 2021, the GST amnesty scheme applied from 1st June 2021 to 31st August 2021. Any taxpayer who hasn’t filed GSTR-3B before the due dates for tax periods starting from July 2017 to April 2021 could file within that deadline on the GST portal

Benefits of the GST Amnesty Scheme 2021

The taxpayers cannot file a particular tax period’s GSTR-3B without filing the previous ones. Moreover, suppose the taxpayer hasn’t filed GSTR-3B for six consecutive tax periods or three consecutive quarters. In that case, they may stand the risk of GST registration getting cancelled. It can impact their business as clients, or GST registered customers may refrain from dealing with you or cancel contracts making GSTR-3B substantial compliance for the smooth running of the company. 

The taxpayers will benefit from this relief as they need not pay hefty late fees, which otherwise discourage them from filing any pending GSTR-3B return. Further, it helps taxpayers restore their business after being severely affected by lockdowns and weak economic conditions due to the pandemic.

What is the Late Fee Reduction Under the GST Amnesty Scheme?

The taxpayers will get a concession in the late fee payable under the GST Amnesty Scheme. The maximum late fee is restricted to Rs.1,000 per return (i.e. Rs.500 under CGST and 500 under SGST) for GSTR-3B with any tax liability other than a nil GSTR-3B filing. 

On the other hand, the maximum late fee payable for a nil GSTR-3B is fixed at Rs.500 per return (i.e. Rs.250 each under CGST and SGST). In other words, the late fee payable for such a return will be lower of the following two amounts. These are the total late fees as calculated under the Act for every day of delay and the maximum late fee as mentioned above.

For instance, suppose XYZ & Co hasn’t filed GSTR-3B of January 2021 due by 20th February 2021 but now wants to file on 2nd August 2021. A late fee as per the Act would have been Rs. 8,150 for 163 days of delay at Rs.50 per day of delay for GSTR-3B with tax liability. But maximum late fee under the scheme is restricted to Rs.1,000 for the return of GSTR-3B for January 2021. So, XYZ & Co is liable to pay a late fee of Rs.1,000 for filing such a return, the tax liability and the applicable interest under the Act.

Challenges and Issues Under the GST Amnesty Scheme

Although the scheme aims to provide relief to non-filers who want to continue their business by rightfully declaring GST data, it is not free from hurdles. Some challenges and issues came along with the GST Amnesty Scheme.

No relaxation in interest dues

Those having tax liability and who didn’t file GSTR-3B are not given a waiver of interest. Still, only the maximum late fee is relaxed for filing it before 31st August 2021.

Non-admissibility of input tax credit

Certain tax professionals question the non-admissibility of Input Tax Credit (ITC) under the GST Amnesty Scheme. Admissibility of ITC under this scheme is a genuine concern raised by tax experts. Although the amnesty scheme allows tax payment pending for previous periods, it is still silent regarding ITC claims in the same return of that preceding financial year.

The CGST Act prescribes the time limit for ITC claims. The ITC on a tax invoice or debit note issued in a financial year can be claimed by the earlier of two dates. These are the due dates of filing GSTR-3B for September of the year following the financial year and the annual return. 

For example, assume the due date to file GSTR-3B of September 2020 was 20th October 2020. The annual return in Form GSTR-9 is scheduled on 31st December 2020. Then, the maximum time to claim ITC for FY 2019-20 was 20th October 2020 in the GSTR-3B of September.

The government extended the time limit by late fee reduction for filing GSTR-3B of preceding tax periods. However, it has not pushed the time limit for claiming ITC for the same periods. So it legally disallows a taxpayer from reporting ITC while filing GSTR-3B of the past tax period. The recipient cannot claim such ITC under the amnesty scheme. 

No relief to late filing of GSTR-1 under the scheme

The GSTR-1 return is not covered under the scheme. So there is no late fee waiver or relief to file pending GSTR-1 for the same tax period as the GSTR-3B that the taxpayer intends to file.

Revocation of cancelled GST registration

Note that without an active GSTIN, taxpayers cannot file pending GSTR-3B returns.

Recently, the CBIC issued a press release and also the Central Tax notification number 34/2021 on 29th August 2021. As per this, the time limit to apply for revocation of cancellation of GST registration stands extended up to 30th September 2021, if GSTINs were cancelled between 1st March 2020 to 31st August 2021 on account of non-filing of GSTR-3B [Section 29(2) clauses (b) and (c) of the CGST Act].

Till 29th August, there was no clarification about GSTINs already cancelled due to non-filing of past GSTR-3B returns about when and how it will be revoked or restored where the aggrieved taxpayer preferred an appeal.

Solutions for the Issues

The taxpayers must be provided with the full advantage of the scheme by looking into these aspects. The government should expand the scheme’s scope to include GSTR-1, GSTR-9, GSTR-10 and allow ITC of past periods where the time limit has expired. Majorly, options to revise returns must be provided to recipients of such ITC. Hence, the government must suitably take note of these anomalies and correct the legal gap at the earliest.

Now that you know everything about the GST Amnesty Scheme, it’s time to file 100% accurate GST returns on ClearGST software by 31st August 2021 without the hassle of calculating tax and late fees, as it’s automatically done for you. If it’s a nil return you have to file, then all you need is 30 seconds with ClearGST software. 

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