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India Eases Taxpayers’ GST Burden During Pandemic

Posted on Aug. 25, 2020

India’s Ministry of Finance has announced that the government will ease taxpayers’ goods and services tax compliance burden, providing an exemption for businesses with annual turnover of up to INR 4 million (approximately $54,000).

In an August 24 tweet, the MOF said that to provide taxpayers with relief during the pandemic, the government will allow deferrals of GST payments, reduce interest rates, and waive or cap late fees at INR 500.

Previously, the threshold for GST exemption was INR 2 million, the MOF noted. It also announced that businesses with annual turnover of up to INR 10.5 million will be able to opt into India’s composition scheme, a simplified GST scheme for small taxpayers. Manufacturers will benefit from a 1 percent tax rate (reduced from 2 percent). The government will also provide relief for the construction sector — more specifically, the housing sector. The GST rate for housing has been set at 5 percent, and a reduced rate of 1 percent will apply to affordable housing.

For individual taxpayers with an annual turnover above INR 50 million, the late-filing fee for GSTR-3B returns will be waived for 15 days following the filing deadline. Late fees will be capped at INR 500 per return if taxpayers file by September 30. The government has also extended the date for filing GST returns for the 2018-2019 tax year to September 30.

For individual taxpayers with annual turnover of up to INR 50 million, the interest rate for late filing of GST returns will be cut in half to 9 percent if the returns are filed by September 30. The government will also waive late-filing fees for the months of February to July if the taxpayer files by September 30. Similarly, the late fee will be capped at INR 500 per return, and the filing deadline for the 2018-2019 tax year has been extended to September 30.

The MOF also simplified annual GST returns and made filing optional for taxpayers with turnover of up to INR 20 million for the 2017-2018 and 2018-2019 tax years. Finance Minister Nirmala Sitharaman said in a tweet August 24 that GST revenue collections have been increasing since the 2017-2018 tax year, and that the steady increase occurred despite the government’s concessions and rate reductions. The MOF praised the fully automated GST processing system, saying that to date, 500 million GST returns have been filed online.

“Taxpayers, businesses, economists, tax officers, and all other interested parties were vocal about the new tax, what they liked, what they wanted changed, and the GST Council continues to respond quickly,” Sitharaman tweeted.

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