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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.
5th July 2022
Table 3.1.1 was inserted to allow taxpayers, both e-commerce operators and e-commerce sellers to report such sales and tax payable on the same for the tax period. It is notified in the CGST notification 14/2022 dated 5th July 2022 along with a few more changes in Table 3.2 and Table 4.
17th May 2022
The due date to file GSTR-3B for April 2022 was extended up to 24th May 2022.
1st February 2022
Budget 2022 updates-
1. The last date to make amendments, corrections in GSTR-3B, and claim any missed Input Tax Credit or ITC of one financial year is no longer due date to file September return of the following year, but it is 30th November of the following year or filing of annual return, whichever is earlier.
2. GST registration can be cancelled if GSTR-3B is not filed for continuous tax periods under Section 29.
29th December 2021
CGST Rule 36(4) is amended to remove 5% additional ITC over and above ITC appearing in GSTR-2B. From 1st January 2022, businesses can avail ITC only if it is reported by supplier in GSTR-1/ IFF and it appears in their GSTR-2B. Section 16(2)(aa) was notified on 21st December 2021.
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.
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.
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.
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.
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.
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.