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GST Council offers relief on late filing of tax returns
June, 22nd 2020

Federal indirect tax body, the Goods and Services Tax (GST) Council, on Friday offered relief to businesses on late filing of monthly returns to boost tax compliance.

Since monthly GST returns can only be filed sequentially, missing one month meant that returns for the next month cannot be filed unless the missing month’s return is filed with a late fee, something many small businesses could not afford due to fund crunch.

Finance minister Nirmala Sitharaman today, after a four-hour videoconference with state ministers, told reporters that late fee for filing monthly return of transactions (form 3B) has been waived off or lowered to "clean up the pendency in return filing."

Accordingly, businesses that have no tax liability but have defaulted on filing returns for the period of July 2017 to January 2020 can file these returns between July to September without any late fee. In case of defaulters who have a tax liability to meet for the period, the late fee has been capped at 500 a month per return, Sitharaman explained.

This is a big relief to businesses as late fee charges could go up to 10,000 a month under the earlier norms. The Council had noted that in the six months between May and October 2019, return filing by assessees had crossed 60% only once due to the high late filing fee.

"This reduced rate of late fee would apply to GSTR 3Bs getting furnished between 1 July 2020 to 30 September 2020. This is to help clear pendency," Sitharaman said.

The Council also decided to halve the interest rate on tax liability to 9% in the case of small tax payers with sales up to 5 crore for late filing of return beyond the specified dates for the three months starting February. The window for filing late returns for these three months will now stay open till 30 September.

Also, for the subsequent three months of May to July, small businesses with sales up to 5 crore who have defaulted on filing returns can file the same without interest or late fee, Sitharaman added.

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