Bid to streamline GST returns: Govt caps late fees on GSTR-3B to Rs 500

The government has also said that there will be nil late fees if there is no tax liability and took the decision after various representations were received to give further relief in the late fee charged for the tax periods of May 2020 to July 2020. This is in addition to earlier provided relief for February 2020 to April 2020 and relief provided for cleaning up past pendency of returns from July 2017 to January 2020.

Experts and tax practitioners hailed the move and said that it will actually streamline a lot of pending issues of the taxpayers and the government.

Important to note here is that over the past few months, the Government has been providing relief measures by way of waiver in the late fee of filing GST returns, in a phased manner. At the first, the waiver had been given for the COVID-19 affected period of February to April 2020 (complete waiver for all returns). Last month, the GST council waived the late fee for the pre-COVID-19 period of July 2017 to January 2020 in categories of ‘no liability’ and ‘with liability’.

Jigar Doshi, Founding Partner-TMSL said, “CBIC states that a uniform structure would be simple to design and implement into an automated platform. With this, the late fee has been waived completely for returns with ‘no liability’ and capped at Rs500 for returns ‘with liability’. The only condition for availing this benefit is for returns to be filed by 30th September 2020. The initiative by CBIC has a dual benefit from the Government’s perspective, to clear the backlog of returns and to impart some working capital relief to the taxpayers. In a recent tweet by the GST Tech, it was clarified that the changes made towards late fees have been incorporated on the portal and the excess amounts would be re-credited in due course. The tweet puts the wheels rolling in motion towards the initiative.”

Abhishek Jain, Tax Partner, EY says: "This is quite a welcome move and should help encourage various businesses, who had defaulted in filing returns earlier, to file their returns.  Some of these amnesty schemes while definitely could at time be looked upon as harmful measures for compliant taxpayers but are imperative especially for small and medium-sized businesses"

As businesses have started resuming operations and continuing the efforts to meet their pending compliance responsibilities, it is expected that all pending returns will be filed under this new window as the late fee waiver has now been restricted to a nominal amount.