Taxes are a source of income for the government. The money raised from taxes is used to overlook the smooth functioning of government offices, as well as the development and maintenance of the country and its government-regulated services. Thus, tax is essential for a country's growth and sustainability.

When the Covid pandemic spread across the world in 2020, several processes were disrupted and altered at several levels. The financial processes, including payment and filing of taxes, also suffered because of the disturbances caused by Covid. While many people could not file their taxes, some couldn't do it on time. Some of the people who did file the taxes faced problems.

This led to widespread tax delays across India, and the country witnesses record low GST collection of only Rs 32,000 crores in April 2020. To overcome the delays and other issues, the government announced the GST Amnesty Scheme.

The GST Amnesty Scheme

The GST Amnesty Scheme seeks to reduce or waive off late fee charges for timeline defaults in filing Form GSTR-3B. The scheme is valid for form filing for the tax period from July 2017 to April 2021.

The scheme comes as a result of the delays caused due to the disruptions in the system because of the Covid pandemic. When the pandemic first spread, all work and processes were halted or delayed indefinitely to cope with the precautions and restrictions necessary to avert the viral spread. Thus, difficulties surfaced in meeting the deadlines of filing GST. This turned out to be a problem for both the government as well as the masses. The government recorded dismally low tax collection figures and faced issues in terms of finances, while the taxpayers were wary of the late tax fee that is levied in case of time defaults.

To solve this problem, the government issued the GST Amnesty Scheme for form filing between June 1, 2021, and August 31, 2021. Recently, this deadline has been extended to the end of the month of November in an attempt to assess the worries of the taxpayers regarding the late fee and to incentivise them to submit their taxes, thereby solving the problems of both parties.

The Reason Behind the Move

The prime reason behind the move is to make the tax-paying experience of the public easy in the current situation. By removing the additional fee, the move will act as an incentive to the taxpayers to file their GST and do so timely.

The government has made several efforts to make the tax-paying processes easy, transparent, and trustworthy in the last few years. To enhance the transparency of the processes, the government of India initiated a state-wise data release of monthly GST revenue collection from January 1, 2020.

According to data published by the ministry of finance, the government of India, the GST collection in March 2020 was approximately Rs 98,000 crores. The collection of March 2021 as stated in the data published by the same ministry, showed a substantial hike, which stated the collections to be an all-time record high of approximately Rs 124,000 crore. The tax revenue further witnessed a surge in April 2021 when the tax collection amounted to a whopping Rs 141,000 crores (approximately) and beat the record set in March to become the new all-time high. The April collections were a significant 14 per cent higher as compared to the March collections as stated by the records of the finance ministry.

How will taxpayers benefit?

This move by the finance ministry comes in the wake of helping and encouraging taxpayers, especially small taxpayers, to file their taxes. The fee waiver will benefit those taxpayers who were unable to file their returns timely because of various reasons, including the ongoing pandemic and/or whose registrations were canceled due to the disruptions caused by the viral outbreak. Now, the taxpayers can make use of this scheme to compensate for the delay without having to bear the burden of a fine. However, they should do it immediately to avoid the last-minute rush.

The GST Amnesty Scheme is an initiative by the government to assist the taxpayers. The move seeks to encourage the taxpayers to submit their taxes by waiving off late fee penalty. Taxpayers should make use of the GST Amnesty Scheme to neutralize the monetary consequences of the delays in tax payment. The recent extension to the deadline has given the taxpayers another chance.