Late fee relief to non-filers of GST returns to help small businesses, add to revenue, say experts

The rationalisation of late fees for delayed filing of monthly GST returns will give relief to small businesses and add to the government revenue, according to tax experts.

The GST Council, chaired by Finance Minister Nirmala Sitharaman and comprising state ministers, on Friday decided to come out with an amnesty scheme to provide relief to taxpayers in late fee for pending returns.

The late fee for non-furnishing of GSTR-3B for July 2017 to April 2021 has been capped at Rs 500 per return for those taxpayers who did not have any tax liability.

For those with tax liability, a maximum of Rs 1,000 per return late fees will be charged, provided such returns are filed by August 31, 2021.

Besides, the council has made it optional for taxpayers with turnover up to Rs 2 crore to file annual returns for 2020-21.

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Also, the reconciliation statement in Form GSTR-9C for fiscal 2020-21 will have to be filed by taxpayers with an annual aggregate turnover of above Rs 5 crore.

EY Tax Partner Abhishek Jain said, “Overall, it can be said that the Council has duly considered the interest of the small industry players and provided them with requisite reliefs, especially since these businesses were most impacted due to the pandemic”.

AMRG & Associates Senior Partner Rajat Mohan said this is a substantial relief in payment of late fees for non-filers of GSTR-3B.

“This one time Amnesty scheme will push up overall compliance, contributing extra funds in the exchequer,” he added.

Shardul Amarchand Mangaldas & Co Partner Rajat Bose said the relaxation in compliance-related measures should provide temporary relief to small and medium taxpayers.

“However, on an overall basis, the council has failed to address major pain points of the industry and the common man resulting from the pandemic,” Bose added.

Deloitte India Senior Director M S Mani said while the amnesty scheme would significantly benefit small businesses, there is a need to extend the same to other businesses who may not have fulfilled their obligations due to the pandemic.

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Athena Law Associates Partner Pawan Arora said, although the council has allowed self-certification of Annual Reconciliation instead of GST Audit from CA, taxpayers should review their annual compliances to ensure proper compliance.

Nexdigm Executive Director - Indirect Tax, Saket Patawari said the compliance relief is likely to benefit around 89 per cent of the taxpayers.

“While all the Council recommendations may provide temporary reliefs to the taxpayers, some important aspects like the correction of duty inversion, entitlement to ITC vis-a-vis vaccination for employees, and extension in due dates for GST returns remain eluded,” he added.

Tax Connect Advisory Services LLP Partner Vivek Jalan said that filing GSTR 9 (annual return) is the last opportunity a taxpayer gets to rectify any mistakes done during the financial year and should be prepared with great care. The GST department may issue notices in case any inconsistency is detected by its Data Analytics Wing in the GSTR 9.