In a landmark decision to address tax disputes and reduce compliance burdens, the GST Council introduced a Waiver Scheme under Section 128A of the CGST Act, 2017. Announced during the 53rd GST Council Meeting on June 22, 2024, this scheme provides significant relief by waiving penalties and interest for eligible taxpayers.
This guide covers the eligibility criteria, procedural requirements, deadlines, and the rationale behind the scheme, helping taxpayers maximize its benefits.
Why Was the GST Waiver Scheme Introduced?
The GST Waiver Scheme aims to tackle challenges stemming from the early years of GST, marked by filing errors, ITC mismatches, and evolving rules. Key drivers include:
| Key Drivers | Description |
|---|---|
| Transition Challenges | Difficulties in adapting to GST during FY 2017-18 to FY 2019-20. |
| Filing Errors | Mistakes in GSTR-1, GSTR-3B, and other returns caused discrepancies in tax liabilities. |
| ITC Mismatches | Variations between claimed and actual ITC led to additional tax demands. |
| Complex GST Rules | Ambiguities in provisions caused unintentional errors, resulting in penalties and interest. |
Eligibility for the GST Waiver Scheme
The scheme is designed for taxpayers facing non-fraudulent demands under Section 73. Here’s a summary:
| Eligibility Criteria | Details |
|---|---|
| Applicable Provisions | Section 73 of the CGST Act (non-fraud cases). |
| Excluded Cases | Section 74 cases involving fraud, suppression, or willful misstatement. |
| Financial Years Covered | FY 2017-18, FY 2018-19, and FY 2019-20. |
| Conditions for Waiver | Full tax liability must be paid by March 31, 2025. |
| Relief Provided | Waiver of 18% interest and up to 10% penalty. |
Step-by-Step Process to Avail the Waiver
Step 1: Verify Eligibility
Ensure that the demand falls under Section 73 and relates to filing errors, mismatches, or non-fraudulent cases.
Step 2: Pay Full Tax Liability
- For Demand Orders: Use the "Payment Towards Demand" option on the GST portal.
- For Demand Notices: Utilize Form GST DRC-03.
Important: Link prior payments to the demand order using Form GST DRC-03A.
Step 3: Submit Application (Forms GST SPL-01/SPL-02)
- GST SPL-01: For demand notices.
- GST SPL-02: For demand orders.
These forms must be filed online before March 31, 2025.
Key Dates to Remember
| Event | Date/Details |
|---|---|
| Notification Issued | October 8, 2024 (Notification No. 20/2024). |
| Scheme Effective | November 1, 2024. |
| Forms Available | From January 2025 on GST portal. |
| Tax Payment Deadline | March 31, 2025. |
| Application Deadline | March 31, 2025. |
Benefits of the Scheme
1. Cost Savings
Save on 18% interest and 10% penalty, significantly reducing financial strain.
2. Legacy Dispute Resolution
Clear tax disputes from GST's initial years, ensuring a fresh start.
3. Simplified Compliance
Avoid lengthy litigation and opt for a streamlined process.
4. Risk Mitigation
Prevent coercive actions like account freezes or asset attachments.
Illustrative Example
Scenario: XYZ Ltd.
- Tax Demand for FY 2018-19: Rs. 15,00,000
- Interest (18%): Rs. 2,70,000
- Penalty (10%): Rs. 1,50,000
Steps Taken:
- Tax payment of Rs. 15,00,000 made on March 10, 2025.
- Application submitted via GST SPL-02 on March 20, 2025.
Outcome:
- Total Savings: Rs. 4,20,000 (Interest + Penalty).
- Resolution: Legacy issues cleared without further legal proceedings.
Caution Points
- Strict Deadlines: Ensure all payments and filings are completed by March 31, 2025.
- Accurate Submission: Double-check application details to avoid rejections.
- Non-Fraud Cases Only: Fraudulent cases under Section 74 are excluded.
- Payment Linkage: Properly link prior payments to avoid discrepancies.
Conclusion: A Golden Opportunity for Taxpayers
The GST Waiver Scheme under Section 128A offers taxpayers a chance to resolve past disputes while saving on penalties and interest. Act promptly to seize this one-time opportunity, ensure compliance, and pave the way for smoother operations..
