Why the GST council is considering an amnesty scheme?

GST Council is a constitutional body which is mandated to be the final decision-making authority on all GST-related matters. There are reports that GST council is considering an amnesty scheme to provide an exit route to ‘nil’ filers and non-filers under the indirect tax framework.

GST Returns:

Every person registered under GST will have to file returns in some form or the other, like:

• A registered person has to file returns either on monthly (normal supplier) or quarterly basis (supplier opting for composition scheme).
• An Input Service Distributor will have to file monthly returns showing details of credit distributed during the particular month.
• Those who are required to deduct tax (TDS or Tax Deducted at Source) and persons required to collect tax (TCS or Tax Collected at Source) have to file monthly returns showing the amount deducted/collected and other specified details.
• Registered entities not filing the return will have to pay penalty in the form of late fee.

Amnesty Scheme:

• Initial GST days had resulted in a lot of non-compliances due to lack of clarity on the law, frequent amendments, GSTN portal issues etc.
• Amnesty scheme is expected to give relief from late fees and encourage genuine non-filers to suo-moto come out and complete their backlog of non-compliances without any fear of penal consequences.

Amnesty schemes have generally resulted in increased compliance and tax revenues. For the amnesty scheme to succeed the crucial factors include timing of the scheme, immunity from penal consequences and commitment to not initiate any investigations for those who participate in such scheme.