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Govt Announces GST Relaxation for Businesses Amid COVID-19 Second Wave

gst relaxation for businesses

The Ministry of Finance (MoF) has recently announced GST relaxations for businesses in India due to the outbreak of the COVID-19 second wave. Many businesses were facing difficulties in complying with the GST rules and provisions. The relaxations include interest rate reduction, late fee waivers, due date extensions, and other amendments in the CGST rules

Reduction in interest rate 

The government has announced a concessional rate of interest, instead of 18% per annum, for delayed tax payments. Here are the reduced interest rates for different categories of taxpayers. 

For registered taxpayers having an aggregate turnover of more than Rs 5 croreOnly 9% per annum for the first 15 days of delay for the tax payable for March 2021 and April 2021, which has to be paid in April 2021 and May 2021
For registered taxpayers having an aggregate turnover of up to Rs 5 croreNil interest for the first 15 days from the due date and 9% for the next 15 days for both normal taxpayers and those under QRMP scheme, for the tax payable for March 2021 and April 2021, payable in April 2021 and May 2021, respectively
For registered taxpayers under the composition schemeNil rate of interest for the first 15 days from the due date, 9% for the next 15 days for the quarter ended on 31st March 2021, to be paid in April 2021

Waiver of late fee

The Government has waived off the late fee for GSTR-3B for April and May 2021. The exemption is available for a delay of up to 15 days and 30 days from the original due date for a taxpayer with a turnover of more than Rs 5 crore and up to 5 crores, respectively. Also, no late fees will be levied if the return is filed by 30 days from the original due date for the quarter ending 31st March 2021.

Extension of return filing due date 

  • The due date of furnishing Form GSTR-1 and IFF for April, which is due in May, has been extended by 15 days. 
  • The due date for filing Form GSTR-4 (Annual return for composition taxpayers) for FY 2020-21 is extended to 31st May 2021 from 30th April 2021.
  • The due date for filing Form ITC-04 for the Jan-March quarter of FY 2020-21 has been extended to 31st May 2021 from 25th April 2021.

Amendments in CGST Rules

  • Relaxation in availing ITC: Rule 36(4), i.e., a 105% cap on availment of ITC in Form GSTR-3B to be applicable on a cumulative basis for tax period April and May 2021, will be applied in return for tax period May 2021. Otherwise, rule 36(4) is applicable for each tax period. 

The filing of GSTR-3B and GSTR-1/IFF by taxpayers using electronic verification code has already been enabled from 27th April to 31st May 2021.

  • Extension of time limit: The deadline for completing any actions under the GST Act that falls within 15th April and 30th May 2021 has been extended to 31st May 2021. 

Here’s the summary for better understanding:

Waiver of late fees for filing of GSTR 1, IFF and GSTR 4  
ReturnMarch 2021April 2021
GSTR 1NA26th May 2021
IFFNA28th May 2021
GSTR 4 (Annual return for composition taxpayers) for FY 2020-2131st May 2021NA
ITC 04 (Quarterly)31st May 2021NA
Turnover exceeding Rs 5 Crores in preceding FY – GSTR 3B (Monthly)     
MonthDate without late feesNIL Interest9% Interest18% Interest
March 20215th May 2021Not ApplicableIf filed till 5th MayFiled after 5th May
April 20214th June 2021Not ApplicableIf filed till 4th JuneFiled after 4th June
Turnover up to Rs 5 Crores in preceding FY – GSTR 3B (Monthly)
MonthDate without late feesNIL Interest9% Interest18% Interest
March 202120th May 2021If filed till 5th May6th May to 20th MayFiled after 20th May
April 202119th June 2021If filed till 4th June5th June to 19th JuneFiled after 19th June
Turnover up to Rs 5 Crores in preceding FY – GSTR 3B (Quarterly under QRMP Scheme)
QuarterDate without late feesNIL Interest9% Interest18% Interest
Jan – Mar 2021 (Cat 1 States)22nd May 2021Till 7th May 20218th May to 22nd MayFiled after 22nd May
Jan – Mar 2021 (Cat 2 States)24th May 2021Till 9th May 202110th May to 24th MayFiled after 24th May

Category 1 states – Chattisgarh, Madhya Pradesh, Gujarat, Dadra and Nagar Haveli and Daman and Diu, Karnataka, Maharashtra, Kerala, Goa, Tamil Nadu, Lakshadweep, Andaman and Nicobar Islands, Puducherry, Telangana, and Andhra Pradesh

Category 2 states – Punjab, Jammu and Kashmir, Chandigarh, Ladakh, Uttarakhand, Himachal Pradesh, Nagaland, Haryana, Uttar Pradesh, Delhi, Arunachal Pradesh, Bihar, Rajasthan, Sikkim, Manipur, Jharkhand, Meghalaya, Mizoram, Assam, Tripura, and Odisha

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