Tax Waiver Scheme: The GST Council, in its 53rd meeting held on June 22, 2024, announced a waiver scheme to significantly reduce tax disputes and provide relief to taxpayers. This waiver applies to demand notices or orders issued under Section 73 of the CGST Act, 2017, specifically for cases where there is no fraud, suppression, or willful misstatement. Covering the financial years 2017-18, 2018-19, and 2019-20, this relief program will enable eligible taxpayers to avoid paying interest and penalties if the full tax amount demanded is paid on or before March 31, 2025.
Overview of Waiver Scheme
This waiver scheme was proposed to ease compliance burdens for taxpayers and streamline the resolution of GST-related disputes. Under Section 73 of the CGST Act, 2017, demand notices or orders are issued for tax demands arising due to reasons other than fraud, suppression of facts, or willful misstatement. The GST Council’s waiver scheme applies exclusively to such non-fraud cases for the fiscal years stated.
To utilize this waiver, taxpayers are required to settle their outstanding tax dues by March 31, 2025. Meeting this condition will exempt taxpayers from paying additional interest and penalties, a provision that could provide significant financial relief for businesses and individuals alike.
Notification of Rule 164 and Procedural Guidelines
To support the waiver scheme, the government notified Rule 164 of the CGST Rules, 2017, via Notification No. 20/2024 on October 8, 2024. This rule officially took effect on November 1, 2024, and provides procedural guidelines for taxpayers seeking to apply for the waiver.
The new Rule 164 mandates that eligible taxpayers must submit a waiver application in either Form GST SPL-01 (for demand notices) or Form GST SPL-02 (for demand orders) on the GST portal. This application must be filed within three months from the notification date, with a deadline of March 31, 2025.
Availability of Forms and Immediate Payment Advice
The GST portal will release Forms GST SPL-01 and GST SPL-02 by the first week of January 2025, according to the GST Council’s announcement. Until then, taxpayers who wish to benefit from the waiver are advised to settle their tax dues promptly to meet the March 31, 2025, deadline.
For those needing to pay their outstanding tax dues immediately, the GST portal offers a “payment towards demand” feature for demand orders. For demand notices, taxpayers can make payments using Form GST DRC-03. However, if taxpayers have already made a payment through Form GST DRC-03 but need to link this payment to a demand order, they can do so using Form GST DRC-03A, which is now available on the GST portal.
Steps to Avail the Waiver
Eligible taxpayers can follow these steps to avail of the waiver:
- Review Demand Notices or Orders: Confirm that the demand notice or order falls under Section 73 for the financial years 2017-18, 2018-19, or 2019-20.
- Make Payment Before Deadline: Pay the full tax amount demanded in the notice, statement, or order issued under Section 73 on or before March 31, 2025.
- File Waiver Application: Once Forms GST SPL-01 and GST SPL-02 are available (expected in January 2025), submit the appropriate form on the GST portal within three months of the notification date.
- Use DRC-03A if Necessary: If a previous payment was made using Form GST DRC-03, link this payment to the demand order through Form GST DRC-03A.
Government’s Perspective and Expected Impact
The GST Council’s waiver scheme reflects its commitment to reducing compliance burdens and resolving long-standing tax disputes in a taxpayer-friendly manner. By easing the interest and penalty obligations on backlogged demand notices, the Council aims to encourage compliance and ensure that taxpayers settle outstanding dues.
Additionally, this waiver is anticipated to significantly lower the volume of GST-related litigation and disputes, thereby promoting a smoother and more efficient tax administration system. It is expected to benefit thousands of taxpayers, particularly small and medium businesses who have struggled with historical tax demands.
Final Thoughts
The GST Council’s waiver scheme for interest and penalties is a welcome initiative that provides taxpayers with a clear path to resolve outstanding tax demands. By following the outlined steps and settling dues promptly, eligible taxpayers can benefit from this limited-time relief. With the GST portal’s release of Forms GST SPL-01 and GST SPL-02 expected by January 2025, taxpayers are advised to prepare for prompt filing to meet the final March 31, 2025, deadline.
