The tax department has proposed cutting the late filing penalties in order to lessen the burden of the small businesses who are still struggling to comprehend the intricacies of the new indirect tax regime. The GST Council on its next meeting on November 10 will consider this proposition and its enactment will surely bring relief to the SMEs.
“The idea is that an entity should not end up paying penalty higher than his tax liability,” said a senior government official. However, it is important to understand here that the government is not bearing in mind to waive off the entire late fee.
Since GST has come into force on July 1, there have been numerous instances wherein due to the slowdown of GSTN, the businesses weren’t able to file the returns on time and then they were charged with a late fee. In certain cases, the penalty for late filing came out to be more than the amount of the actual tax liability. Likewise, taxpayers who aren’t supposed to file returns, as their tax liabilities are nil, are also subjected to pay a late fee.
The government’s intention is not to penalize the taxpayers who have unknowingly skipped the deadline because of the technical faults at the end of GSTN. In fact, small-scale traders are new to the system of filing returns online and there stands a fair chance that they missed the closing date because of lack of knowledge regarding the processes.
In the current scenario, a late fee of INR 100 each, under Central GST (CGST) and State GST (SGST) or INR 200 per day is charged on the taxpayers. Also, 18 percent interest per annum is chargeable over and above the late fee.
“Late fee for all taxpayers who could not file GSTR3B for month of July has been waived, but not the interest on late payment of dues. Interest will be applicable to all taxpayers who have not discharged their complete GST liability for July by August 25,” said the finance ministry by means of the microblogging portal Twitter in the month of September.