The GST council has recommended the waiver of interest and penalty for demand notices issued under Section 73 of GST Act. This was a much awaited decision by the council which is also taxpayer friendly.

The GST council has recommended the waiver of interest and penalty for demand notices issued under Section 73 of GST Act. This was a much awaited decision by the council which is also taxpayer friendly. To facilitate this initiative, the council has proposed the insertion of a new section, Section 128A, into the CGST Act. This amendment specifically targets demands raised for the fiscal years 2017-18, 2018-19, and 2019-20. Taxpayers will qualify for the waiver if they pay the full amount of tax demanded in the notice by March 31, 2025.

The press release issued by the council states as follows:

“Insertion of Section 128A in CGST Act, to provide for conditional waiver of interest or penalty or both, relating to demands raised under Section 73, for FY 2017-18 to FY 2019-20 : Considering the difficulties faced by the taxpayers, during the initial years of implementation of GST,  the GST Council recommended, waiving interest and penalties for demand notices issued under Section 73 of the CGST Act for the fiscal years 2017-18, 2018-19 and 2019-20, in cases where the taxpayer pays the full amount of tax demanded in the notice upto 31.03.2025. The waiver does not cover demand of erroneous refunds. To implement this, the GST Council has recommended insertion of Section 128A in CGST Act, 2017.” Section 73 of the GST Act pertains to situations where tax has not been paid or has been short paid, erroneously refunded, or where input tax credit has been wrongly availed or utilized, due to reasons other than fraud or willful misstatement or suppression of facts. The 53rd meeting of the GST Council, chaired by Finance Minister Nirmala Sitharaman and attended by the Revenue Secretary and CBIC Chairman, convened today, June 22, 2024, in New Delhi. The meeting focused on Measures for facilitation of trade and compliances burden reduction. Also read: GST Council Recommends Monetary Limits for GST Appeal Filing by GST Department The taxpayers are concerned about the benefits, given that orders up to 2018-19 have already been issued and Show Cause Notices (SCN) for 2019-20 have been issued. Taxpayers who have already paid interest and penalties are unsure if there are provisions to credit these payments.