No need to pay interest & penalty on GST tax demand

No required to pay interest & penalty on GST tax demand; conditional waiver from Nov 1, 2024

Central Board of Indirect Taxes and Customs has introduced Section 128A into the Central Goods and Services Tax Act, 2017 effective from November 1, 2024. This provision grants GST Taxpayers relief from interest and penalties on non-fraudulent Goods and Services Tax demand notices issued u/s 73.

Along with the waiver, the Goods and Services Tax Council introduced a provision that allows businesses to rectify and claim missed Input Tax Credits for a specified period, effective from Sept. 27, 2024. This provision helps avoid future disputes over past ITC claims and minimizes the risk of penalties related to delayed or missed claims, further simplifying the Goods and Services Tax compliance process.

Key conditions for availing this relief are:

1. Applicable Years: It covers Goods and Services Tax demand notices for the financial years 2017-18, 2018-19, and 2019-20.
2. Payment Deadline: To benefit from the waiver, taxpayers must pay the full outstanding tax amount by March 31, 2025.
3. Non-Fraudulent Cases: This relief only applies to non-fraudulent cases. Cases involving fraud or willful misstatement are excluded.

The Goods and Services Tax waiver scheme allows businesses to settle outstanding tax disputes by paying the due tax amount by March 31, 2025, without incurring penalties and interest. To benefit from this scheme:

1. Tax Acceptance: Businesses must accept the tax demand and pay the amount owed.
2. Waiver of Penalties and Interest: Upon full payment of the tax, all associated interest and penalties will be waived, effectively closing the dispute

Exclusions:

• Fraudulent Cases: The waiver does not apply to cases involving fraud, such as deliberately misreported transactions.
• Erroneously Sanctioned Refunds: Businesses that have received improper refunds are excluded from this waiver.
• Previously Paid Penalties: If a business has already paid penalties and interest, they will not receive a refund under this scheme.

This amendment is aimed at reducing compliance burdens and providing relief to taxpayers, encouraging early settlement of pending Goods and Services Tax disputes.

Finance Minister Nirmala Sitharaman emphasized that this measure aims to ease Goods and Services Tax compliance and reduce the burden on businesses.

Rectification of Input Tax Credits. For more information, you can refer to the official notification on the Central Board of Indirect Taxes and Customs  website by clicking the following link: Explore (cbic.gov.in).

For a comprehensive understanding of the new functionalities and frequently asked questions about IMS, you can refer to the official FAQs Here to get a better understanding of the new functionality.

• GSTN IMS manual
• Impact on ITC & on liability of supplier under different scenarios IMS W.E.F 01.10.2024
• Complete Guide about Functionality GST Invoice Management System