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GST Council relaxes compliance penalties for firms
June, 13th 2020

No late fees for return filing if taxpayer has nil GST liability for period from July 2017 to January 2020, late fee capped at H500 for others

The GST Council has capped the late fee for registered entities filing returns late at C500 until September and waived off the late fees of businesses with nil tax liability between July 2017 and January 2020.

The decision was announced after the GST Council conducted its 40th meeting on Friday, chaired by Finance Miister Nirmala Sitharaman via video conferencing.


For small taxpayers whose aggregate turnover is up to Rs 5 crore, the rate of interest for late furnishing of GST returns is being reduced from 18 per cent to 9 per cent. If their supplies have been affected during the lock down period, there will be a waiver of interest too.

This will apply to all returns submitted between July 1 and September 30, according to the finance ministry.

Tax payers whose GST registration has been cancelled till June 12, may now also apply for revocation of cancellation of registration up to September 30. The Council also decided that it will hold a special meeting in July to discuss the framework for compensation payouts to states, according to sources, even as GST revenue plunge sharply due to pandemic-driven disruptions.

“In July, we’ll have a one-point agenda meeting on GST compensation cess. We’ll discuss if market borrowing is needed to sort the issue and if yes, how should it be done,” Finance Minister Nirmala Sitharaman said after the GST Council meeting.

The government had stopped publishing GST mumbers for the month of April after dismal collections and had subsequently extended the deadline for filing returns.

According to the finance minister, revenue collections stood at only 45 per cent of normal over the last two months.

Under GST law, states were guaranteed compensation for any loss of revenue in the first five years of GST implementation, starting July 1, 2017. The shortfall is calculated assuming a 14 per cent annual growth in GST collections by states over the base year of 2015-16.

However, with less than expected GST collections and further trouble because of the lockdown, states are demanding that this period with tax support be extended for another 2 years.

“With ballooning funds required for GST compensation and drastic shrinkage of cess collection after Covid, the payment crisis has been aggravated, which was apparent during the last fiscal itself. Only solution is… to borrow funds and extend cess period by a year or two,” Thomas Isaak, finance minister of Kerala said.The Council also deferred decisions on inverted duty structures to a later date.

According to Union Minister of Finance Nirmala Sitharaman, GST revenue collections stood at only 45 per cent of normal over the last two months as economic activity declined

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