New Delhi – The GST Council on Friday waived off the late fee that the tax payers were supposed to pay if they missed the deadline for filing their tax returns for July. This was done taking into consideration that July was the first month for the implementation of the new tax regime. The last date to file the GST for July was 25th August for businesses and traders who did not want to claim any ITC (input tax credit). And the deadline was 28th August for those who wanted to avail the input tax credits for the taxes paid in their previous indirect tax regime.

The late fee exemption has particularly been implemented because this is a transition phase for the businesses hence the council felt it should not enforce any penal provisions for these minor offences at least at such an early stage.

A notice was published by the Central Board of Excise and Customs, which stated that the central government on the recommendation of the Council had waived off the late fee payable by all the registered tax payers who failed to file their returns within the due date.

The late fee was as much as ₹ 200 each day from the deadline (28th August in this case) till the return was finally filed. ₹ 100 would have to be paid for SGST, and Rs 100 would have to be paid for CGST.

Abhishek Jain, partner –indirect taxes at EY India said that the decision to waive off the late fee was a welcoming step as many tax payers are yet to adapt and thus file their returns. Also though the late fee has been removed the interest charged remains and thus in case of any short fall in the taxes received, the interest will have to be paid with the unpaid amount from the day the due date has passed.

A total of 5.95 million taxpayers were expected to file for returns, but till 29th August only 3.83 million were able to comply. Thus the remaining 2.1 million taxpayers were supposed to face the penalty for the late filing.

Also in cases where additional tax liability was supposed to be paid for July, the tax payers will have to submit that additional payment with interest and if there where there was a reduction in the liability, the excess input tax credit would be brought forward to the next month’s returns. If there were some additional input tax credit, then this additional tax credit would be made available to the tax payers.