The Finance Ministry has collected the most GST since February this year, with a total of Rs.1.05 lakh crore. This is a 10% increase over the sum received in the same month last year. However, a significant number of non-filers of GST remain, especially in the MSME field. If these companies do not file their returns by the deadline, they will be fined by the government. The GST Amnesty scheme was implemented by the government to provide companies with a one-time relief from this.

Satyakam Arya, a Bilaspur-based trader, had petitioned the Supreme Court to expand the Amnesty Scheme to allow MSMEs and small businesses more time to file their returns. The Supreme Court dismissed the petition, arguing that the Amnesty Scheme was a policy decision and that the SC lacked the authority to guide the government or the GST Council on the matter.

What exactly is the GST Amnesty Scheme?

Non-filers of GST returns would be excluded from paying the fines and penalties imposed for late filing for a one-time period. So far, over 25 lakh companies have failed to file GST returns. The amnesty scheme would relieve companies and the GST council of any financial strain, reducing further pressure on them.

According to the rule, anyone who is registered for GST must file a return in any format. The registered individual must file a return either monthly (for regular suppliers) or quarterly (for non-regular suppliers) (supplier choosing composition scheme). An ISD (Input Service Distributor) must file a monthly return that outlines the credit distributed each month. The individual who is responsible for collecting tax (TCS or Tax Collected at Source) and deducting tax (TDS or Tax Deducted at Source) is required to file monthly returns detailing the amount collected/deducted and other prescribed amounts. Often, a non-resident taxable individual must file a return for the time period in which no transactions occurred.

Why do MSMEs want the GST Amnesty Scheme to be continued?

MSMEs want the GST Amnesty Scheme to be expanded for a variety of reasons.

After the lockdown started, more than 60 lakh businesses have asked the Finance Minister to postpone or extend the GSTR3B filing deadlines. Initially, the amnesty program was only extended until the end of January this year.

Small companies, on the other hand, want the GST amnesty program to be expanded even further.

MSMEs are concerned that the government is calculating late fees for GST filings from the ‘Original Due Date,’ which was March 31, 2020, according to a video posted by the GST Registration website.

Updates in GST Amnesty Scheme

The GST system came into effect back in 2017 and the Treasury noted that, even by 2020, many businesses had ignored them and remained lawless. The government wanted these businesses to register under the GST and, in doing so, introduced the Amnesty Scheme.

For people who were guilty but did not file repayments on time, late payments accumulate. Through the Financial Exemption Scheme, this late disbursement was significantly deducted. Therefore, people who were once reluctant to install GST can now register and return files without having to worry about late fees or penalties.

The following is a description of the Exemption Scheme:

  • From the 25th of July 2020 to the 30th of September 2020, people were given a one-off payment on the late payment of persons who were registered but did not complete their tax returns between July 2017 to July 2020.
  • For taxpayers who have incurred NIL benefits i.e. no tax payment, late payments were completely deducted.
  • For others, the amount disbursed in the past is withheld for Rs. 250 per law (i.e. Rs. 250 of CGST and Rs. 250 of SGST). Any late payments in excess.
  • This withdrawal applies to those people who submitted their forms before 30 September 2020. Anyone who fills in the files thereafter will have a standard amount of late payment.

What Specific Provisions Do the Specified Notifications Include?

The following are the notices related to the GST Amnesty Scheme, in order of issuance:

Notification NumberDate of NotificationSummary
Notification No. 74/2019 – Central Tax

&

Notification No. 04/2020 – Central Tax

26th December 2019

 

 

10th January 2020

  • With starting from the 19th of December 2019, the late fee for registered persons who failed to submit GSTR-1 by the due date from July 2017 to November 2019 is fully waived.
  • If they file their return between the 19th of December 2019 and the 17th of January 2020, they will receive a refund.
Notification No. 52/2020 – Central Tax

&

Notification No. 57/2020 – Central Tax

24th June 2020

 

 

30th June 2020

  • The late fee for registered persons who failed to file GSTR-3B by the due date from July 2017 to July 2020 will be waived with effect from June 25, 2020.
  • If they file their return between July 1st and September 30th, 2020, they will be eligible for a refund.
  1.  If the amount of tax due in the return is zero, the late fee is completely waived.
  2. If there is a tax due in the return, the late fee above INR 250 is forgiven, meaning that a taxpayer’s maximum late fee is INR 250 (CGST) plus INR 250 (SGST), for a total of INR 500.
Notification No. 67/2020 – Central Tax

 

21st September 2020
  • The late fee is waived for registered persons who failed to file GSTR-4 by the due date for quarters from July 2017 to March 2020.
  • If they file their return between September 22nd and October 31st, 2020, they will be eligible for a refund.
  1.  If the amount of tax due in the return is zero, the late fee is completely waived.
  2. If there is a tax due in the return, the late fee above INR 250 is forgiven, meaning that a taxpayer’s maximum late fee is INR 250 (CGST) plus INR 250 (SGST), for a total of INR 500.
Notification No. 68/2020 – Central Tax

 

21st September 2020·         For registered persons who failed to file GSTR-10 by the due date, the late fee payable above INR 250 is waived, i.e., the maximum late fee payable for a taxpayer shall be INR 250 (CGST) and INR 250 (SGST), for a total of INR 500.

·         If they file their return between September 22nd and December 31st, 2020, they will be qualified.

Note:

A composite review has been issued, taking into account both the principal and revised notices applicable to the GST Amnesty Scheme.

Late fees remain a significant liability for taxpayers filing returns from July 2017 to July 2020 after September 30, 2020. Many companies have suffered huge losses as a result of the pandemic that struck the world this year, and they are finding it difficult to meet their daily tax obligations. For late filing of GSTR-3B by the due date, MSMEs must pay a late fee of INR 50 per day (INR 20 in the case of a NIL return). As a result of all of this, the government has been repeatedly asked to extend the GST Amnesty Scheme’s duration.

The Case

Last year, the world was hit by a pandemic, and the economy suffered as a result. Except for necessities, all trade-related operations were suspended, causing several companies to close. MSMEs, in particular, struggled. For the most part, they rely on day-to-day transactions to stay afloat.

Many MSMEs’ owners find it difficult to meet their current obligations, let alone pay late fees. When the government announced the Amnesty program, it allowed citizens to settle their debts without incurring late fees. However, the plan was announced at a time when companies were struggling to make ends meet.

People have made several demands to extend the Amnesty program so that they can profit from it. In the other side, the government did not. Satyakam Arya, a trader from Bilaspur, filed a petition in the Supreme Court (SC) seeking an extension of the scheme.

He believes the supreme court should interfere and order the government and the GST (goods and services tax) council to extend the scheme because the livelihoods of many traders are at stake. He also stated that companies were closed down during the pandemic, which is exacerbating the situation. And that the late fees for MSMEs of Rs. 50 per day was a little excessive.

What method does the government use to distribute the benefits of the GST Amnesty Scheme?

Any licensed organization that fails to file the return will be subject to a late charge. From the specified due date to the actual date when the returns are eventually filed, the individual is required to pay a late fee of Rs. 50 per day, that is, Rs. 25 per day in each case of CGST and SGST (in case of any tax liability) and Rs. 20 per day, that is, Rs. 10 in each case of CGST and SGST (in case of Zero tax liability), subject to a limit of Rs. 5,000. Late fees are likely to be waived under the GST Amnesty program.

The Supreme Court’s decision

The Supreme Court (SC) heard the plea and rejected it. It concludes that the Amnesty program was a policy decision made by the executive and has no bearing on fundamental rights. The scheme was announced as a way to help people cope with their financial burdens. This is for those who have already filed their GST returns (goods and services tax). The government has full control over the policymaking process. The court has no authority to interfere unless it concerns people’s constitutional rights as guaranteed by the constitution. As a result, the said plea will not be granted relief under Article 32 of the constitution.

3 Things to Remember About the GST Amnesty Scheme

  • If MSMEs fail to file GST on the due date, they will be fined about $50 per day. The Amnesty program allows companies to clear up their backlog of non-compliances without fear of government retaliation.
  • Over 1 lakh companies have taken advantage of the scheme, declaring tax dues totaling about 79,968 crores, which have been reduced by nearly 40,000 crores.
  • The scheme was designed to help SMEs who have not filed GST in years and have accumulated significant late fees.

Late Fee Norms for Defaulters Under GST Amnesty Scheme

Any registered individual who fails to file the return is subject to a fine in the form of a late fee. If GSTR 3B is filed late, the individual must pay a late fee of Rs 50 per day, i.e. Rs 25 in case of SGST and CGST (in case of any tax debt) and Rs 10 in each SGST and CGST (in case of Nil tax debt) i.e. Rs 20 per day from the specified due date to the actual date when the returns are eventually filed, up to a maximum penalty of INR 5,000. According to reports, the Amnesty program could provide relief from such fees.

Last Date for Submitting Amnesty Scheme

On November 30, the deadline for submitting an option for the Amnesty Scheme, 2020, to resolve unpaid tax debts prior to the implementation of the Goods and Service Tax (GST) will pass.

The scheme will extend to all tax arrears, including those that are already being litigated in court (excluding arrears following KGST from 2005 onwards).

It would apply to traders who owe money under the Kerala Value Added Tax Act, Central Sales Tax Act, Tax on Luxuries Act, Kerala Surcharges Act, Kerala Agriculture Income Tax Act, and Kerala General Sales Tax Act, according to an official release.

The scheme’s features include a 100% waiver of interest and taxes, a 60% waiver of balance tax arrears if outstanding dues are paid in one lump sum, and a 50% waiver of balance tax arrears if outstanding dues are paid in installments. This scheme is also available to taxpayers who have not paid their arrears under the previous scheme. Any money spent under the previous system will be credited in full.

Conclusion

GST (goods and services tax) can be very confusing in situations like this. To avoid any misunderstanding, make sure to file your GST (goods and services tax) return on time. For more details connected with updates on GST, you can visit our website services LegalRaasta.Our expert team will support you in each part linked to GST registrationCompany RegistrationTrademark Registration, and its services together important. You can simply download our app of LegalRaasta APP. Furthermore, you can ring us a call at 8750008585 and feel free to send your query on Email: contact@legalraasta.com