The government has notified significant changes to the Goods and Services Tax (GST) laws, giving businesses a chance to have certain interest and penalties waived on past tax demands. This relief, effective November 1, comes under the new Section 128A, which empowers GST authorities to offer these waivers, easing the compliance burden on taxpayers.
The provision primarily targets cases where tax demands were raised under Section 73 of the GST Act, which deals with non-fraudulent tax discrepancies. According to the GST Council’s decision at its 53rd meeting, the move aims to resolve disputes where tax demands stemmed from misunderstandings or interpretations of the law, rather than intentional evasion.
Who is eligible for the waiver?
The waiver applies to taxpayers assessed under Section 73 for the financial years 2017-18, 2018-19, and 2019-20. Eligibility is limited to those whose tax issues arose without allegations of fraud, misrepresentation, or suppression of facts. Taxpayers involved in disputes for non-fraudulent reasons can benefit from this scheme if they agree to settle the tax demand and halt ongoing litigation.
How the waiver works
To take advantage of this waiver, businesses must accept the tax demand and settle the due amount by March 31, 2025. Once the tax is paid, the interest and penalties associated with the case will be waived, effectively closing the dispute. It is important to note, however, that this waiver does not apply to cases involving fraudulent activity, erroneously sanctioned refunds, or taxpayers who have already paid penalties and interest.
Taxpayers who have already paid interest and penalties won’t be eligible for refunds under this scheme.
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Easing compliance burdens
In addition to this waiver, the GST Council has introduced a provision allowing businesses to rectify and claim missed input tax credits (ITC) during a specified period, effective from September 27. This measure is designed to prevent disputes over past ITC claims and mitigate the risk of penalties.
“Our intent is to make GST compliance smoother and less cumbersome,” Finance Minister Nirmala Sitharaman said after the council meeting.
