GST Update on relaxations given by government

GST Update on relaxations given by government - 005/2020-21

GST Update on relaxations given by government
On 3^rd April 2020, a series of notifications and a circular have been issued notifying the effect of relaxations given by government announced in press Release amid the pandemic spread due to COVID-19. In this update, we shall discuss the relaxation given in the most concerned matter of filing returns that is GSTR-1 and GSTR-3B for taxpayers.
Notification No. 33/2020-Central tax dated 3^rd April, 2020 has being issued waiving the late fees payable for the periods March 2020, April 2020 and May 2020 and for the quarter ending 31^st March 2020 for those who fail to furnish the details of outward supplies in GSTR-1 by due datebut furnishes such details on or before 30^th June 2020.
Though relaxation has been given on waiver of late fees on filing of return subject to the condition mentioned above, but taxpayers shall be keen on filing GSTR-1 timely on or before the due dates. This is due to the fact that the receiver delays the supplier’s payment until it is not reflected in his GSTR-2A due to the limit for availing credit prescribed in Rule 36(4). He releases the payment of supplier only when it is reflected in his GSTR-2A. Hence, the supplier is compelled to file it by due date. Furthermore, provision of Rule 36(4) of CGST Rules has been deferred and it is to be seen on cumulative basis but still the credit will be allowed on showing in GSTR-2A only. A separate update on this amendment in provision of Rule 36(4) is being sent to you. Hence, taxpayers will be filing GSTR-2A at the earliest and there is no payment of tax attached to it.
Further notification 31/2020- Central tax and 32/2020-Central Tax have been issued notifying the reduced rate of interest and waiver of late fees for filing GSTR-3B. This is done by way of inserting proviso. We have explained this provisions in separate update as well as hindi update.

Circular No. 136/06/2020-GST dated 3^rd April 2020 has clearly mentioned that the due dates for the periods February, march and April 2020 has not been extended. Though the government has given relaxation to rate of interest in the case of GSTR-3B and late fees in the case of both GSTR-1 and GSTR-3B but yet these are subject to fulfilment of conditions as mentioned in our another update. Let us take a few scenarios which are to be faced practically by the taxpayers
Senerio 1: Where entire output liability is paid by way of credit
Mr. A having turnover more than Rs. Crores is a taxpayer whose entire output tax liability is to be offset by using credit. Though on satisfying the above conditions for relaxation in interest rate yet the interest is to be paid by A on the gross tax liability. This is because the announcement made via press release of retrospective applicability of interest on net tax liability has not been made applicable. So this will again force the taxpayers to file the returns on or before the due dates as we are all aware of the difficulty being faced due to this. Moreover, the delay in filing of return by one day i.e. from June 24 to June 25 will force him to pay huge interest from beginning at higher rate also. This might be due to technical problem of portal. Hence, he will wish to file the return on due date.
Senerio 2: Where there arises a tax liability in cash, payment is made before the due date but return is filed on or before the dates prescribed above
Mr X having turnover above Rs. 5 Crore has made payment for the period of March 2020 before the due date on 20^th April 2020 but due to some reasons he filed the return on 24^th June 2020. In this situation he shall be liable to pay interest @ 9% from 6^th may 2020 as interest is waived for the first 15 days from the due date. This is due to the reason that the portal calculates interest liability from the date when the return is filed. Even the payment is deemed as made by the department only when it is offset in the return. Deposit of cash in electronic cash ledger is not payment. The tax is offset only when the return is filed. Hence, everyone will wish to file the return on due date at least those assessee who have turnover more than Rs. Crore.
Government needs to look into these matters as well because instead of the act, rules and notifications portal is being superseded.

This is solely for educational purpose.

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GST Update on relaxations given by government - 005/2020-21

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