Penalty acts as a deterrent as taxpayers avoid delays in GST Payment
The government had provided an extension for the last date for filing the return for Goods and Services Tax (GST) considering the current pandemic situation. Before, the last date to file the returns and to make payment was 31st March 2020 but now it has been extended till 30th June 2020 by the Finance Minister of India, Mrs. Nirmala Sithraman. This extension in date was introduced as the circumstances demand because of the outbreak of coronavirus, to ease the procedure of filing returns for the taxpayers. Also, the government has imposed an interest rate of 9% on the returns which are filed after 31st March and which were charged at the rate of 18% for the delayed returns in the prior cases.
Normally, the last date for filing the form GSTR 3B for any month is the 20th of the following month, but the government had further extended the last date to file the returns under GSTR 3B form for the months of March, April, and May 2020 till the final week of June 2020. Plenty of assessees having an annual turnover above or worth Rs. 5 crores are homing on filing the returns before 31st March 2020 as they figured the interest rate of 9% to be ‘a little too much for them’.
The assessees whose annual turnover is below Rs. 5 Crores are exempted from any interest but some late fees and penalties will be charged due for the late payments. But those individuals having turnover more than Rs. 5 Crores will be charged interest at the interest rate of 9%. The assessees with larger tax liabilities will be charged a larger interest on the late payments. Hence, those major taxpayers having sufficient funds are attempting to pay the tax liabilities in time. Ritesh Kanodia, Partner at Dhruva Advisors, said, “The industry has taken a mixed approach to the delayed return filing, depending upon the cash flow situation. The comparison which is done is the 9 percent interest (on late payment of GST) and the interest on the bank loan. However, filings have slowed down on an overall basis”.
A bunch of taxpayers have loans hovering on their heads too, so they are confronting some troubles too in paying their dues and installments of loans and the tax liabilities. Some assessments are ambiguous as to whether they should be paying their employees’ salaries or should pay their own tax liabilities instead? Nidhi Goyal, Managing Partner at Avinav Consulting, says, “Those SMEs which have sufficient cash flow to pay salaries would like to pay GST liabilities on time and save on the 9 percent interest cost that they would incur otherwise”. Other businessmen are taking appropriate steps to meet the compliance despite the extension of dates as they want to aid the Goods and Services Tax Network (GSTN)by making the payments.
A partner at AMRG & Associates mentioned in a statement that the GST Network is running smoothly unlike the earlier times around the due dates when the people used to find filing the GST returns comparatively harder. Rajesh Gupta ,the co-founder and director at Busy Infotech, said, “Due to lockdown, business transactions have been reduced and left with only 10-20 percent in total, so accordingly, the load on the network is less as compared to normal. So the network is working smoothly and helping taxpayers to work at home. It has enabled almost more than 20,000 registrations within 10-13 days of the first phase of lockdown”.
