GST Waiver for Interest and Penalty: All You Need to Know
The Ministry of Finance announced on October 8, 2024, new rules and procedures to waive interest and penalties for non-fraudulent GST demands. This scheme, effective from November 1, 2024, provides significant relief to eligible GST-registered taxpayers who received non-fraudulent demand notices under Section 73 of the CGST Act for the financial years 2017-18, 2018-19, and 2019-20.
Who is Eligible for the GST Waiver?
The waiver is for taxpayers who received non-fraudulent GST demand notices, and it covers only the interest and penalty components—the core tax demand must still be paid. This relief scheme applies to demand notices issued under Section 73, targeting common filing mistakes made during the initial GST transition period.
A tax expert explained, “Section 128A waives interest and penalties for non-fraudulent taxpayers assessed under Section 73 for the fiscal years 2017-18, 2018-19, and 2019-20.”
To qualify, taxpayers must pay their outstanding tax demand by filing Form GST DRC-03 by March 31, 2025, and submit the waiver forms by June 30, 2025. Filling out these forms carefully is crucial to avoid further issues.
Steps to Apply for the GST Waiver
Here’s a simplified breakdown of the process under Section 128A:
- File an Application on the GST Portal: Apply electronically using FORM GST SPL-01 for non-fraudulent notices or FORM GST SPL-02 for certain orders. Include details of the tax payments made using FORM GST DRC-03.
- Payment Requirements: Credit the tax demand to the electronic liability register. File an application for credit if FORM GST DRC-03 was used for payment. The payment deadline is March 31, 2025.
- Withdrawal of Appeals: Provide proof of withdrawal of any appeal, writ, or petition filed regarding the GST demand before applying for the waiver.
- Review and Approval: Once submitted, the proper officer will review the application and either approve the waiver or issue a notice for more information.
What Tax Experts Say About the Waiver Scheme
According to tax experts, this waiver scheme provides much-needed relief, especially given the high interest (18%) and penalties on unpaid tax demands during the early GST phases.
Another tax professional added, “Forms GST SPL-01 and SPL-02, along with accompanying forms, have streamlined the process. Taxpayers must ensure correct and timely submission to avoid rejection.”
Some experts suggested the process could be simpler. “Instead of a multi-form process, a straightforward waiver provided upon tax payment before the final demand order would have been more practical,” an analyst noted.
Key Takeaways
- Eligibility: The waiver applies to interest and penalties for non-fraudulent GST demands for FY 2017-18, 2018-19, and 2019-20.
- Forms to Use: Applications must be made electronically using FORM GST SPL-01 or FORM GST SPL-02, along with payment details in FORM GST DRC-03.
- Deadline: The deadline to pay the tax is March 31, 2025, and the waiver application forms must be submitted by June 30, 2025.
The GST waiver scheme offers a chance to correct earlier filing errors without high penalties or interest. Taxpayers are urged to complete the forms diligently and adhere to deadlines to avoid rejection or further issues.
For more information or to discuss how this waiver might apply to your situation, get in touch with Efiletax. Our team of experts is here to help you navigate GST compliance with ease.