New GST Amnesty Scheme Allows Taxpayers to Contest Demands

On October 7, 2023, the GST Council introduced the GST Amnesty Scheme 2023. This scheme allows taxpayers to challenge tax demands issued by tax inspectors from March 2023 to January 31, 2024.

Here’s how it works:

• After a tax officer issues an assessment order, taxpayers have three months to appeal it, as per GST regulations.
• An extension of one month is available for the appeal deadline.
• The 52nd GST Council meeting extended the deadline for GST-registered businesses to file appeals. They now need to deposit 12.5% of the tax demand, up from the previous 10%.

GST Amnesty Scheme 2023 Offers Taxpayers a Second Chance

The GST Council has introduced the GST Amnesty Scheme 2023, allowing taxpayers to appeal orders made from March 31, 2023, until January 31, 2024.

• Taxpayers can appeal tax orders they disagree with.
• To do this, they need to deposit 12.5% of the disputed tax amount.
• A part of this deposit, 20% or 2.5%, should go into the Electronic Cash Ledger.

Furthermore, the GST Council clarified that any property temporarily seized by tax inspectors under the GST Act will be returned after one year, making it easier for businesses.

This scheme aims to assist many taxpayers who missed the earlier appeal deadlines, offering them a second chance to address their concerns.

Extended Appeal Period and Higher Deposit for GST Appeals

Under the existing GST law, when a tax officer issues an order for taxes, businesses have three months to appeal. In some cases, they can get an extra month for this. However, in response to recent events and recognizing the challenges taxpayers face due to economic difficulties, the deadline for filing appeals has been significantly extended.

The GST Council also decided to increase the pre-deposit amount required for filing an appeal. The pre-deposit has increased from 10% to 12.5% of the entire tax demand. This change applies to all orders issued until March 31, 2023.

Changes in Electronic Cash Ledger Impacting Taxpayers

One interesting aspect of this announcement is how it affects taxpayers’ Electronic Cash Ledger accounts. Under these changes, when you make a pre-deposit to file an appeal, you must set aside at least 20% (which is 2.5% of the disputed tax amount) from these ledgers.

This adjustment is meant to simplify financial transactions related to tax disputes, making the process smoother for taxpayers and authorities. It aims to help those who couldn’t file their appeals within the set deadlines due to various challenges, including time constraints.

A Positive Move for Taxpayers

The GST Council’s decision is likely to help many taxpayers who couldn’t appeal within the first three months. It offers them more flexibility in dealing with ongoing economic challenges.

This action also shows the government’s commitment to making the tax system more user-friendly. By extending deadlines and increasing pre-deposit requirements, it aims to reduce conflicts, boost compliance, and create a better environment for businesses operating under the GST system.

What GST Amnesty Means for You

GST Amnesty offers relief to individuals and businesses facing fines and penalties when they appeal GST-related issues. We expect many taxpayers with appeals that are ongoing or not yet filed to benefit from this decision.

The extended deadline is a push for people to follow the rules, resolve disputes, and find solutions, as it provides more time to sort out tax issues and seek resolutions.

Key Updates in the GST Amnesty Scheme

• Nil late fee for filing FORM GSTR-4 returns for specific periods: No late fee for Nil returns from July 2017 to March 2019, and a Rs. 500 fee (Rs. 250 CGST + Rs. 250 SGST) for other returns if filed by June 30, 2023.
• Maximum late fee limits: The late fee for filing an Annual Return in FORM GSTR-9 for any Financial Year from 2017-18 to 2021-22 is capped at Rs. 20,000 (Rs. 10,000 CGST + Rs. 10,000 SGST) if filed by June 30, 2023.
• Reduced late fee for Final Return: The late fee for filing the Final Return in FORM GSTR-10 is Rs. 1,000 (Rs. 500 CGST + Rs. 500 SGST) if filed by June 30, 2023.
• Revocation of registration: Businesses with canceled registrations due to non-filing of returns before December 31, 2022, can apply for reinstatement by filing all pending returns and paying due taxes, interest, penalty, and late fees by June 30, 2023.
• Withdrawal of Best Judgement Assessment orders: Best Judgement Assessment orders issued before February 28, 2023, for not submitting valid FORM GSTR-3B returns will be considered withdrawn if those returns are filed by June 30, 2023, along with payment of due taxes, interest, and late fees.

GST Amnesty Scheme for Different Tax Filers

• The program is designed to assist those who haven’t paid their GST taxes. It applies to specific GST forms: GST R-4, GST R-9, and GST R-10.
• The primary benefit of this program is tax refunds. It also reduces late fines, which is a relief for taxpayers.
• This initiative is especially helpful for individuals and businesses who might face serious consequences if they fail to file their taxes.
• Additionally, it aims to clear the backlog of unresolved tax filing issues in the country.

Note: Amnesty for Non-Filers of GSTR-10, GSTR-9, and GSTR-4

Advantages of the GST Amnesty Scheme

• Exemption from professional tax for female employees earning less than Rs. 25,000.
• Only one late payment of Rs. 1,000 is allowed per return.
• Offers a one-time opportunity for non-filers to catch up on their GST filings.
• Common claims of the regulations have specific conditions and limitations.
• Non-filers can join the streamlining without extra charges and ensure they file GST for the upcoming fiscal year.