GST Council: Interest, Penalties To Be Waived if Tax Paid On Time

NEW DELHI: Ahead of the full budget for 2034-25 in July, Union finance minister Nirmala Sitharaman announced that the 53rd GST Council meeting in New Delhi resolved to waive interest and penalties for demand notices issued under Section 73 of the GST Act. A biometric-based Aadhaar authentication will now be introduced to prevent fake input tax credit claims.

“This will help us combat fraudulent input tax credit claims made through fake invoices,” Sitharaman said. These measures are expected to benefit traders, MSMEs, and the general public.

These decisions are believed to focus on trade facilitation, taxpayer relief, and enhanced transparency.

Additionally, services for hostel accommodation provided to students outside educational institutions will be exempt from GST for services valued up to '20,000 per person per month, provided these services are for a minimum continuous period of 90 days. This move aims to benefit students, particularly those from rural areas.

GST will not be levied on services such as battery-operated vehicles and intra-railway services, including railway tickets and charges for waiting rooms and cloakrooms.

Sitharaman elaborated on various decisions, noting that small and medium taxpayers, especially MSMEs, will benefit from an extended time limit for GSTR-4 filing to June 30, FY24-25 onwards. The Council recommended amending the CGST Act to allow a three-month period for filing appeals in the GST Appellate Tribunal starting from a date to be notified by the government.

The time limit for availing input tax credit for invoices or debit notes under Section 16(4) of the CGST Act for financial years 2017-18 through 2020-21 will be deemed from 2011 to 2021, with retrospective effect from July 1, 2017. Additionally, for demand notices from 2017-18, 2018-19, and 2019-20, interest and penalties will be waived if the tax is paid by March 31, 2025.

To reduce litigation, the Council recommended limits of Rs 1 crore for High Court appeals and Rs 2 crore for Supreme Court appeals. The maximum pre-deposit amount for filing appeals before the appellate authority will be reduced from Rs 25 crore CGST and Rs 25 crore SGST to Rs 20 crore CGST and Rs 20 crore SGST.

During the pre-budget consultation with state finance ministers, Sitharaman reiterated the Union government's support through timely tax devolution, finance commission grants, and GST compensation arrears. Many ministers appreciated the government's scheme for special assistance to states for capital investment and provided suggestions for further improvement.

Andhra Pradesh finance minister Payyavula Keshav stated that the discussions aimed to clarify and simplify processes, making them more user-friendly and business-friendly, while avoiding future litigations.

Rajasthan's Deputy CM and finance minister, Dia Kumari, highlighted the state's demands, including the Eastern Rajasthan Canal Project and new railway lines and highways, and mentioned that a detailed letter outlining these requests had been sent to the finance minister.