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GST Amnesty Scheme

The GST Amnesty Scheme is a government programme created to benefit traders and businesses who have failed to file their GSTR 3B due to any reason. This programme was brought into action when the Covid-19 pandemic affected many businesses, and business owners could not file their returns.

The Government of India has introduced the scheme to reduce the interest rate or waive the interest completely for the pending returns. This is highly beneficial for businesses as it provides relief to the taxpayers who have not or could not file their GSTR-3B returns in the last tax year.

There are various other benefits to the GST Amnesty Scheme that we will discuss in this article.

What is GST Amnesty Scheme?

Every business owner registered under the Goods and Service Tax (GST) domain needs to file their taxes periodically. Even if the revenue is zero or the business is running at a loss, the business owner needs to enter this information on the GST portal. These returns are filed under the Normal Scheme or Composition Scheme monthly or quarterly. All these returns are filed under GSTR 3B, which is a self-assessed form filed by the business owner every month, quarter, or year.

Due to the ongoing pandemic, businesses could not file for returns in time due to cash crunch or other reasons. The GST Amnesty Scheme provides relief to the taxpayers who could not file their returns or have missed filing their returns under form GSTR 3B.

Latest update on GSTR 3B and the validity of the GST Amnesty Scheme

  • Based on the latest updates from budget 2022, some amendments are made to GSTR 3B. ‘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.’ 
  • The Central Board of Indirect Taxes and Customs, CBIC’s latest tax notification number, issued the GST Amenst Scheme’s validity until 30th November 2021.
  • This means taxpayers who have pending GST returns from July 2017 to April 2021 can file the returns until 30th November 2021 with a reduced maximum fee.
  • If the taxpayer does not file the returns for continuous tax periods, under section 29, their GST registration will be cancelled.

Reduced maximum late fee under GST Amnesty Scheme

  • The maximum late fee was revised to INR 1,000 per return and INR 500 under each CGST and SGST.
  • For returns that are filed as nil for GSTR 3B, the highest late fee per return for the GSTR-3B to be filed for the previous period is Rs. 250 each for CGST and SGST.

Benefits of the GST Amnesty Scheme for small businesses

  • Before introducing the GST Amnesty Scheme, businesses that fail to file taxes continuously would lose their GST registration. With GST Amnesty Scheme, taxpayers can now pay for their previous returns and still have their GST license.
  • Since a maximum fee is now charged on the GST Amnesty Scheme, taxpayers will not have to shell out more money towards late fees or non-filing returns.
  • The Amnesty Scheme also shows some support from the government’s point of view that they’re ready to understand business owners’ problems, especially small business owners, and provide some relief.
  • The tax collected and the late fees collected from the Amnesty Scheme and GSTR 3B are eventually used to benefit the business owners and the public.
  • Lastly, it helps businesses gain back the momentum and helps them get back on their feet post the pandemic and economic downturn.

Eligibility of the GST Amnesty Scheme

  • Every registered business under the GST Act is liable to file for returns, and hence they are eligible for the GST Amnesty Scheme.
  • Taxpayers who have failed to file the returns for their business from July 2017 to April 2021 have the most benefit and are eligible for the GST Amnesty Scheme.
  • If your business registration has been cancelled due to late payment or non-filing of returns between July 2017 and  April 2021, they can revoke their license and pay the fees.
  • Other businesses or taxpayers that have been notified by the government from time to time.

Challenges of the GST Amnesty Scheme

  • No waiver on interest

While the payment for late fees has been reduced and has a maximum limit, the same cannot be applied for the interest. The interest amount on the late payments can be pretty heavy as there is no waiver on the same.

  • No decision on Input Tax Credit 

The Amnesty Scheme has not made any decision on the Input Tax Credit yet. This can raise some concern between taxpayers because the input tax credit can sum up to considerable amounts causing losses to the taxpayers.

  • GSTR 1

No relief has been given for late fees or non-payment of fees under GSTR 1. GSTR 1 is where the business’s sales are filed, and in case of late payments, the entire fine needs to be borne by the taxpayers.

  • Interest dues not relaxed

Though the late fee is reduced for the returns to be filed on or before a deadline, the interest dues of such returns have not been relaxed. As these interest rates are heavy, they may discourage the taxpayers from filing their returns.

All in all, the GST Amnesty Scheme is a beneficial move by the government to support the small businesses of India. It shows that the government is ready to assist the businesses in dire economic conditions and ensure the business owners receive help wherever possible.

The latest dates for the Amnesty Scheme and GST returns keep on changing, and it is important for you to stay up to date on these dates based on the communication from the government. Keep visiting the space for more updates on GST Amnesty Scheme.