GST Amnesty scheme
- November 4, 2023
- Posted by: OptimizeIAS Team
- Category: DPN Topics
GST Amnesty scheme
Subject :Economy
Section: Fiscal Policy
GST Amnesty scheme for filing appeals on GST demand notices has several key points, as follows:
- Extended Filing Time for Appeals:
- Taxpayers are now granted an extended deadline until January 31, 2024, to file appeals against demand orders related to the GST.
- The extension comes in response to the outcome of the 52nd Goods and Services Tax Council meeting.
- Pre-Deposit Requirements:
- Taxpayers are required to pay a pre-deposit amount of 12.5% of the tax under dispute to avail the benefits of the scheme.
- At least 20% of the tax under dispute (equivalent to 2.5% of the tax amount) must be debited from the electronic cash ledger, which might impact the working capital positions of businesses.
- Coverage and Conditions:
- The scheme covers cases where the appeal was not filed within the stipulated time frame under Section 107 of the CGST Act, 2017, for demand orders passed on or before March 31, 2023.
- Appeals can be filed in instances involving tax liability along with interest and penalty, but not in cases related solely to interest, fines, and penalties.
- Scope of Sections 73 and 74:
- Sections 73 and 74 apply to situations where the tax department identifies discrepancies such as tax shortfalls, non-payment, wrongful refund of input tax credit, or alleged misstatement or suppression of facts.
- Exclusions from the Amnesty Scheme:
- The amnesty scheme does not cover assessment orders issued under Sections 62, 63, and 64, which primarily affect non-registered entities or non-filers of returns.
The introduction of this scheme is expected to provide relief to taxpayers facing challenges related to the timely filing of appeals and promote smoother resolution of disputes within the GST framework.
GST Amnesty Scheme 2023:
- Amnesty Plan for Tax Appeals:
- Taxpayers can contest demand orders issued by tax inspectors until January 31, 2024.
- The deadline for filing appeals has been extended to provide taxpayers with more time to respond to assessment orders.
- Increased Pre-Deposit:
- To avail of the extended appeal period, taxpayers are required to make an increased pre-deposit of 12.5%, up from the previous 10% of the tax demand.
- A portion of the pre-deposit, at least 20% or 2.5% of the tax under dispute, must be debited from the Electronic Cash Ledger.
- Clarification on Property Attachments:
- The validity of property attachments by tax authorities is now limited to one year, after which the attached property must be released.
- This amendment ensures that temporary seizures of assets do not unduly affect businesses’ operations.
- Facilitating Taxpayers:
- The GST Council’s decisions are aimed at making the GST system more taxpayer-friendly and providing relief to those facing challenges related to GST matters.
- The extended deadline incentivizes adherence to tax regulations and encourages the expeditious resolution of disputes.
- Efficiency and Transparency:
- The changes introduced by the GST Council contribute to enhancing transparency and fairness in the GST system.
- The amendments streamline procedures related to appeals and property attachments, ultimately fostering a more efficient and taxpayer-friendly GST regime.
About GST
GST, or Goods and Services Tax, is a comprehensive indirect tax levied on the supply of goods and services across India.
Here are some key points that describe GST:
- Indirect Tax System: GST is an indirect tax that has replaced various indirect taxes previously levied by the central and state governments.
- Implementation Date: The GST Act was passed by the Indian Parliament on March 29, 2017, and it came into effect on July 1, 2017.
- Unified Tax Law: It serves as a unified tax law for the entire country, streamlining the taxation process and reducing the complexity of the previous tax system.
- Multi-Stage Taxation: GST is a multi-stage tax, meaning it is applicable at every step of the supply chain, from the production or manufacturing stage to the final sale to the consumer.
- Destination-Based Tax: It is a destination-based tax, implying that the tax is levied based on the location of the consumption of goods or services rather than the location of their production.
- Dual Taxation Structure: In the case of intra-state sales, GST is bifurcated into two components – Central GST (CGST) levied by the central government and State GST (SGST) imposed by the respective state governments. For inter-state sales, Integrated GST (IGST) is charged by the central government.
The Goods and Services Tax (GST) system in India consists of three main components, each administered by different levels of government:
- CGST (Central Goods and Services Tax): This tax is collected by the Central Government on transactions within a single state. For example, if a transaction occurs within Maharashtra, CGST will be levied.
- SGST (State Goods and Services Tax): It is the tax collected by the State Government on intra-state transactions. For instance, when a transaction takes place within Maharashtra, the state government levies SGST.
- IGST (Integrated Goods and Services Tax): IGST is imposed by the Central Government on inter-state transactions. For instance, if goods are sold from Maharashtra to Tamil Nadu, IGST will be collected by the central government.
Advantages of GST include the elimination of the cascading effect on the sale of goods and services, leading to a reduction in the overall cost of goods. Moreover, the technological integration of various processes such as registration, return filing, refund applications, and responding to notices has accelerated and streamlined many procedures.
However, some issues have been associated with the implementation of GST.
- Some businesses have faced high operational costs due to compliance requirements.
- Moreover, certain items, such as braille paper, wheelchairs, and hearing aids, have been criticized for being taxed under GST, leading to them being termed as a ‘Disability Tax’.
- Additionally, petrol has not been included under the GST regime, which goes against the idea of a unified tax structure for all commodities.
About GST Appellate Tribunal
- The GST Appellate Tribunal is a quasi-judicial body designed to handle and resolve disputes related to the Goods and Services Tax (GST) in India. It functions as an independent entity to hear appeals against orders issued by the GST authorities or the Appellate Authority. The tribunal comprises both a national bench and several regional benches, led by a chairperson appointed by the central government.
- The introduction of this tribunal is expected to expedite the resolution of GST-related disputes, alleviating the burden on the higher courts. Under the GST system, if an individual is dissatisfied with a decision made by a lower court, they can file an appeal to a higher court, following a hierarchy that includes the Adjudicating Authority, Appellate Authority, Appellate Tribunal, High Court, and ultimately the Supreme Court.
- The need for such a tribunal arises from several factors, including the aim to alleviate the burden on the judiciary caused by the increasing number of GST disputes. Additionally, establishing an independent mechanism for resolving GST-related conflicts can enhance the efficiency and effectiveness of the GST system, promoting greater certainty and predictability in the tax regime and mitigating the risks of tax evasion.
- Presently, the Indian GST system is relatively new, leading to compliance and interpretation challenges. The existing multi-layered adjudication hierarchy can be complex, time-consuming, and financially onerous for taxpayers, particularly small and medium-sized enterprises. The establishment of the GST Appellate Tribunal aims to address these issues and streamline the process of resolving GST disputes in India.
About Reverse charging of Goods and Services Tax (GST)
- Reverse charging of Goods and Services Tax (GST) is a mechanism that shifts the responsibility of paying the tax from the supplier to the recipient of goods or services.
- In normal circumstances, the supplier is responsible for paying the GST to the government. However, in cases of reverse charging, the recipient becomes liable to pay the tax instead of the supplier.
- This mechanism is typically employed when the supplier is not registered under GST or has failed to remit the GST dues to the government. Reverse charging is a means for the government to ensure that the GST liability is met even if the supplier does not fulfill their obligations.
- Several examples of goods and services on which reverse charging is already applicable include services provided by a goods transport agency, services rendered by an advocate to a business entity, supply of manpower for any purpose, renting of a motor vehicle provided by an individual or Hindu Undivided Family (HUF) to a business entity, and supply of specified goods like gold, silver, or precious stones by an unregistered supplier to a registered person.
- By implementing reverse charging, the government aims to maintain the integrity of the GST system and ensure that tax liabilities are appropriately fulfilled, even in situations where the supplier may not be compliant with the GST regulations.