What is GST amnesty scheme 2021?

The Government of India introduced the GST amnesty scheme after introducing the Goods and Service Tax (GST) in the Indian taxation regime. It is a strategized mechanism that aims to increase compliance with GST regulations by ensuring that the taxpayers are allowed to voluntarily declare their previous GST payments and gain a single-time penalty waiver for late payment.

What is the GST amnesty scheme 2021?

Non-payment of GST attracts a certain penalty for tax defaulters or non-filers. The GST amnesty scheme provides a chance to such persons to avoid the payment of late fees by declaring and paying their pending tax liabilities under the GST amnesty scheme and thereby have their penalty waived. The history of the scheme dates back to July 2017, when it had been introduced for the very first time to help taxpayers cope with the new regulations that might have deterred them from making payments. The same had been extended till March 2019. However, this scheme was reinstated on 1st June, 2021, possibly owing to the significant toll that the Covid 19 pandemic has taken on taxpayers. Therefore, through the GST amnesty scheme 2021, all fillable returns under GSTR-3B from July 2017 till April 2021 were eligible to be exempted from any late penalty. 

GST amnesty scheme 2021 last date

The initial announcement through the Central Tax notice issued stated that the last date for submitting GSTR-3B was 31st August 2021, beyond which it would not be acceptable. The same had later been extended to 30th November 2021. 

How does the GST amnesty scheme benefit taxpayers?

A major benefit of the amnesty scheme 2021 GST was that it could end GSTR-3B defaulters by giving them the chance to escape or reduce late fees. Since the GSTR-3B for current years could only be paid after clearing the initial years, it provided a golden opportunity to break a line of defaulters through a one-time measure. This enables the taxpayer to protect their GST registration in the future without incurring huge penalties for previous dues. Therefore, the aim of the scheme was to provide relaxation to non-filers of GSTR and thereby promote GST compliance in India. 

What are the drawbacks of the GST amnesty scheme 2021?

  • The scheme is limited in approach as it does not apply to all GST liabilities. For instance, taxpayers that seek to apply under GSTR-1 returns are not eligible for similar waivers even if they fall within the specified period.

  • Certain opinions also suggest that since the waiver is limited only to the late penalty and does not extend to the reduction of the interest payable on the accrued amount, the liability to be borne by the taxpayer continued to be substantial in nature.

Therefore, while businesses and individuals may utilize the GST Amnesty Scheme 2021 to clear off their pending tax liabilities, it might continue to have drawbacks. Therefore, the Government could consider the extension of the GST Amnesty Scheme to include other forms of GST returns such as GSTR-1 and explore the possibility of a reduction in the interest payable on the pending tax liabilities to create greater attrition among taxpayers.

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