The GST Council has recommended inserting Rule 164 into GST Rules, detailing the procedures and conditions for waiving interest or penalties on tax demands under Section 73 of the Act for FYs 2017-20, in accordance with Section 128A of the Act

The GST (  Goods and Services Tax )  Council, during its 54th meeting, has recommended the insertion of Rule 164 in the Central Goods and Services Tax ( CGST ) Rules, 2017 for the waiver of interest, penalty, or both on tax demands under Section 73 of the CGST Act for FYs 2017-2020. This new rule will establish a clear procedure and set conditions for availing the waiver of interest, penalty, or both on tax demands under Section 73 of the CGST Act for the financial years 2017-18, 2018-19, and 2019-20. The waiver is in line with the newly introduced Section 128A of the CGST Act. The introduction of Rule 164 is an important step towards addressing GST disputes related to these financial years. Many businesses, particularly those still adjusting to the transition into the GST regime, have faced tax demands coupled with interest and penalty charges. The proposed rule will offer them a clear path to resolve such issues without the additional financial burden of penalties or interest. Get a Copy of Comprehensive Guide to Reverse Charge under GST, Click here Under the provisions of Section 128A, registered taxpayers who wish to take advantage of the waiver must ensure that the tax is paid by the deadline of March 31, 2025. This gives businesses enough time to settle outstanding tax liabilities while benefiting from the waiver. The Council has also recommended the issuance of necessary forms to facilitate the process. Additionally, the Council has called for the issuance of a circular to provide clarity on the procedure for availing the waiver. This will address common queries and potential issues that may arise while implementing the provisions of Section 128A. The Council further suggested that Section 146 of the Finance (No. 2) Act, 2024, which provides for the insertion of Section 128A into the CGST Act, be notified from November 1, 2024. Get a Copy of Comprehensive Guide to Reverse Charge under GST, Click here The press release stated as follows: “TheGST Council recommended insertion of rule 164 in CGST Rules, 2017, along with certain Forms, providing for the procedure and conditions for availment of benefit of waiver of interest or penalty or both, relating to tax demands under section 73 of CGST Act, pertaining to FYs 2017-18, 2018-19 and 2019-20, as per section 128A of CGST Act. The Council also recommended to notify  under sub-section (1) of section 128A of CGST Act, 31.03.2025 as the date on or before which the payment of tax may be made by the registered persons, to avail the said benefit as per section 128A of the CGST Act. The Council also recommended the issuance of a circular to clarify various issues related to availment of waiver of interest or penalty or both as per section 128A of CGST Act. The Council also recommended that section 146 of Finance (No. 2) Act, 2024, which provides for insertion of section 128A in CGST Act, 2017, may be notified with effect from 01.11.2024.