GST Amnesty Scheme: Eligibility, Benefits and Challenges

The GST Amnesty Scheme was introduced 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 were unresolved and possible solutions. 

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.

In February 2023, the GST Council at its 49th meeting recommended implementing GST amnesty scheme for taxpayers who have not yet filed GSTR-4, GSTR-10 and GSTR-9 of the past financial years. Also, the Council suggested providing relief to those whose GST registrations were cancelled by allowing them more time to revoke such cancellations. Further, the authorities would not invoke Section 62 for failure of certain taxpayers who did not furnish returns by time limit defined in notice if they filed on or before 30th June 2023.

The GST council in its 53rd meeting, for the first time recomended to introduce section 128A which provides for the waiver of interest and penatly. Subsequently, in the 54th GST Council meeting, rule 164 got introduced which got effective from 1st November, 2024 vide notification No.20/2024- Central tax dated 8th October 2024. Further, CBIC issued circular no. 238/32/2024-GST for clarification of various doubts related to Section 128A of the CGST Act, 2017

The new GST Amnesty Scheme 2024

• The new GST Amnesty scheme by section 128A came into effect on November 1st 2024.
• The new scheme allows taxpayers who have received notices u/s 73 of the CGST Act for FY 2017-18, 2018-19, and 2019-20 to apply for a waiver of interest and penalty.
• No refund will be made if interest & penalty have already been paid.
• To avail of the benefit, eligible taxpayers must pay the actual GST amount demanded and submit their application for waiver online through the GST portal in Form GST SPL-01 or Form GST SPL-02. As per the latest advisory issued on the GST portal, the forms will tentatively be made available for taxpayers by early January 2025. Until then, taxpayers are advised to pay the demanded tax by March 31st, 2025, to ensure they receive the waiver benefits by paying their taxes before the deadline.
• Additionally, the scheme offers taxpayers a one-time waiver of late fees, which will definitely benefit small and medium enterprises.

All about GST Amnesty Scheme 2023

The CBIC issued fresh Central Tax notifications on 31st March 2023 to implement 2023 GST amnesty scheme. 

GST amnesty scheme 2023 notification pdf are issued in numbers 02/2023, 03/2023, 06/2023, 07/2023, and 08/2023 explained in the below table-

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 hadn’t filed GSTR-3B before the due dates for tax periods from July 2017 to April 2021 could file within that deadline on the GST portal. 

Benefits of the GST Amnesty Scheme

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 2021?

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.

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 was 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 Clear GST solution to avoid hassles of missing deadlines while keeping the accuracy of data. No more hassles 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 Clear GST software.