Is interest and penalty levied if a notice was issued under Section 73 for the period from 2017 to March 2019?

Quick Revise

Q: Is interest and penalty levied if a notice was issued under Section 73 for the period from 2017 to March 2019?

A: No, interest and penalties will not be levied if the demand notice issued under Section 73 is for cases not involving fraud, suppression, or willful misstatement. According to the 53rd GST Council meeting recommendations, if the full tax liability is paid on or before March 31, 2025, the interest and penalties will be waived for demand notices related to the financial years 2017-18, 2018-19, and 2019-20.

Q: Can input tax credit (ITC) be claimed if it is reflected after September for the next financial year?

A: Under the standard provisions of Section 16(4) of the CGST Act, input tax credit (ITC) must generally be claimed within the financial year of the invoice or by September 30th of the subsequent financial year, or by the date of filing the annual return for that financial year, whichever is earlier.

However, as per the recommendations from the 53rd GST Council meeting, ITC can now be claimed up to November 30th of the next financial year, or by the date of filing the annual return for that financial year, whichever is earlier.

Q: Is interest levied if the balance is available in the cash ledger but the return is filed late?

A: No, as per the recommendations of the 53rd GST Council meeting, interest(u/s 50) is not levied  if there is a balance available in the cash ledger, even if the return is filed late.

Interest on Delayed Returns: No interest under Section 50 on amounts available in Electronic Cash Ledger on the due date of return filing.

Q: Is inter-state B2C supply reporting mandatory under GST?

A: Yes, inter-state B2C supply reporting is mandatory under GST. The threshold for reporting B2C inter-state supplies has been reduced from Rs. 2.5 lakh to Rs. 1 lakh.

Summary of Recommendations from the 53rd GST Council Meeting

 (June 22, 2024)

1. Tax Compliance and Relief Measures:

• Interest and Penalties Waiver: Waiver of interest and penalties for demand notices under Section 73 of the CGST Act for FY 2017-18, 2018-19, and 2019-20, if full tax is paid by March 31, 2025.
• Input Tax Credit (ITC) Deadline: Time limit for availing ITC deemed to be November 30, 2021, for FY 2017-18 through 2020-21.
• Pre-Deposit Reduction: Reduction in pre-deposit amounts required for filing appeals—Rs. 20 lakh for GST Appellate Tribunal, Rs. 1 crore for High Court, and Rs. 2 crore for Supreme Court.
• Interest on Delayed Returns: No interest under Section 50 on amounts available in Electronic Cash Ledger on the due date of return filing.
• Sunset Clause for Anti-Profiteering: New applications for anti-profiteering to cease from April 1, 2025.

2. GST Rate Changes:

• Goods:
  • 12% GST on steel, iron, and aluminum milk cans; cartons, boxes, and cases (corrugated and non-corrugated paper); solar cookers; and sprinklers.
  • Reduction of GST on certain paper cartons and boxes from 18% to 12%.
  • Extension of IGST exemption for defense imports and research equipment.
• Services:
  • Exemption of services provided by Indian Railways to the public, including platform tickets and retiring rooms.
  • Exemption for accommodation services up to Rs. 20,000 per month for stays longer than 90 days.
  • Clarification on taxability of various insurance and reinsurance services.

3. Facilitation Measures:

• Appeal Filing: Monetary limits for government appeals; reduction in pre-deposit requirements; and extension of appeal filing period.
• Input Tax Credit: Relaxation in conditions for claiming ITC and clarification on credits for Optical Fiber Cables and other items.
• Tax Collection: Reduction of Tax Collected at Source (TCS) by e-commerce operators from 1% to 0.5%.

4. Procedural Changes:

• Biometric Authentication: Introduction of biometric-based Aadhaar authentication for GST registration on a pan-India basis.
• Return Filing: Extension of due date for composition taxpayers’ GSTR-4 return; exemption from annual GSTR-9 return for small taxpayers; and amendments in filing procedures for various forms.
• Clarifications and Adjustments: Clarifications on the valuation of related-party services, taxability of certain insurance and financial services, and handling of refund claims.

5. Law and Procedure Amendments:

• Time Limits: Common time limits for demand notices and orders; increased time for reduced penalty benefits.
• Refund Restrictions: Amendments to restrict refund of IGST where export duty is payable.
• B2C Reporting: Threshold for reporting B2C inter-State supplies reduced from Rs. 2.5 lakh to Rs. 1 lakh.
• Other Link

If an appeal is filed and the favorable order results in a zero demand, the assesse can claim a refund for the pre-deposit amounts made via cash and credit ledgers.

If an appeal is filed and the favorable order results in a zero demand, the assesse can claim a refund for the pre-deposit amounts made via cash and credit ledgers.