GST Council proposes interest, penalty waiver on tax dues

New Delhi: The Goods and Services Tax (GST) Council Saturday empowered tax authorities to waive interest and penalties on past tax demands, reduced the pre-deposit amount for filing appeals, fixed monetary limits for appeals against assessees at various legal forums and set a sunset date for anti-profiteering cases in a range of decisions aimed at easing doing business in the country.

"Our intent is to make GST assessees' life easier, simpler and less cumbersome... We are working towards less and less compliance," Union finance minister Nirmala Sitharaman, chairperson of the body, told reporters after the council's 53rd meeting that was held in the capital.

The council will take up pending reform measures when it meets next, likely by August end.

Saturday's measures by the council at its first meeting after the formation of the new government at the Centre could bring relief to multiple sectors, including shipping, airlines, insurance and non-banking financial companies (NBFCs) facing large tax demands, said experts.

"Waiver of interest and penalty for past GST demands is a great step which would hopefully bring down the litigation to some extent," said Pratik Jain, partner, PwC India.

Sitharaman said the council had taken a number of decisions on trade facilitation and easing the compliance burden that will benefit traders, MSMEs and other businesses.

GST authorities will now be able to conditionally waive interest and penalties on tax notices issued between 2017 and 2020, barring cases of wilful default.

The condition here is that the full tax demanded is paid up to March 31, 2025, Sitharaman said, giving details of the council's recommendations.

"The scheme is in the form of an amnesty where if tax demanded is paid before March 31, 2025, for notices issued under a situation where fraud, misrepresentation, etc., has not been alleged, then interest and penalties are not to be demanded," said Saloni Roy, partner, Deloitte India. "This measure shall be a relief to many taxpayers who deposited/considered depositing tax on reverse charge basis on secondments to India but did not deposit interest."

The council exempted hostel accommodation for students and working professionals costing up to ₹20,000 from GST and set April 1, 2025, as the sunset date for anti-profiteering cases. The council also decided that tax authorities will not appeal court cases involving tax amounts less than ₹20 lakh at the GST Appellate Tribunal, less than ₹1 crore in high courts and less than ₹2 crore in the Supreme Court, barring policy matters. To ease the burden on taxpayers, the council decided not to levy interest under the CGST Act in the case of delayed filing of returns on the amount available in the Electronic Cash Ledger (ECL) on the due date.

It also allowed them to correct any omitted or incorrect information in GSTR1 through a new form. The council decided to change the due date for filing of returns in the GSTR4 form for composition taxpayers from April 30 to June 30, following the end of the financial year.

Several recommendations of the law committee and the fitment committee under the council could not be discussed at the meeting due to paucity of time and may be taken up at the next meeting. The council approved a uniform rate of 12% on all milk cans, irrespective of use, and on all types of cartons and water sprinklers, including those against fire. It reconstituted the group of ministers on rate rationalisation that will give an update on the progress so far at the next meeting.

The council also referred the matter of taxation on fertilisers to a group of ministers. Currently, fertilisers attract a GST rate of 5%, while raw materials such as sulphuric acid and ammonia face higher GST at 18%. It also approved clarifications on the taxability of loans given by one group company to another and on corporate guarantees, among others.