Analysis of GST Late Fee Waiver Notification No. 08/2025 – CENTRAL TAX

On January 23, 2025, the Ministry of Finance (Department of Revenue) issued Notification No. 08/2025 – Central Tax, providing relief to registered taxpayers under the Central Goods and Services Tax (CGST) Act, 2017. This notification highlights the Central Government’s proactive approach in addressing compliance challenges faced by taxpayers while maintaining a balance between regulatory oversight and facilitation. Below is a detailed analysis of the key aspects of this notification and its implications for taxpayers:

Context and Purpose

The notification has been issued under the powers granted by Section 128 of the CGST Act, 2017, enabling the government to waive late fees associated with filing delays under Section 47 of the Act. This waiver applies specifically to:

1. Annual Returns (FORM GSTR-9): These are comprehensive returns summarizing the taxpayer’s annual activities, required under Section 44.
2. Reconciliation Statement (FORM GSTR-9C): This form reconciles data reported in the annual return with the taxpayer’s audited financial statements and is mandatory for specific registered persons.

The notification targets registered taxpayers who failed to submit the GSTR-9C reconciliation statement along with the GSTR-9 annual return for the financial years 2017-18 to 2022-23.

Key Provisions of the Notification

1. Late Fee Waiver:
   • Late fees under Section 47 for delayed filing of GSTR-9C are waived beyond the threshold prescribed under the CGST Act.
   • This waiver applies up to the date of furnishing GSTR-9 for the respective financial year, provided the GSTR-9C statement is submitted on or before March 31, 2025.
2. No Refund of Already Paid Late Fees:
   • Taxpayers who have already paid late fees for delayed submission of GSTR-9C are not eligible for a refund under this notification.
3. Target Beneficiaries:
   • Registered persons required to furnish both GSTR-9 and GSTR-9C but who failed to submit the reconciliation statement along with the annual return.

Implications for Taxpayers

1. Compliance Relief:
   • This notification provides much-needed relief for businesses that struggled to meet compliance deadlines for multiple financial years, especially during the initial years of GST implementation and the COVID-19 pandemic.
2. Encouragement for Pending Filings:
   • By setting a deadline of March 31, 2025, the government aims to encourage taxpayers to file any pending reconciliation statements without facing prohibitive late fees.
3. Limited Scope of Refunds:
   • The restriction on refunds for late fees already paid may be disappointing for some taxpayers who had promptly cleared their penalties. However, this ensures administrative simplicity and avoids unnecessary complications.
4. Ease of Doing Business:
   • The waiver aligns with the government’s broader goal of simplifying GST compliance and supporting businesses, especially small and medium enterprises (SMEs) that may lack extensive resources for tax compliance.

Practical Considerations for Businesses

1. Action Required:
   • Taxpayers who have not yet submitted their reconciliation statements for the financial years 2017-18 to 2022-23 must ensure compliance before March 31, 2025, to avoid additional penalties.
2. Collaboration with Tax Consultants:
   • Businesses should work closely with their tax advisors or consultants to reconcile discrepancies and prepare accurate GSTR-9 and GSTR-9C filings.
3. Audit and Reconciliation:
   • A thorough audit of records and reconciliation of financial statements with GST returns will be crucial to ensure compliance with the notification’s requirements.

Conclusion

The issuance of Notification No. 08/2025 – Central Tax reflects the government’s pragmatic approach in facilitating compliance while maintaining the integrity of the GST framework. By providing this late fee waiver, the Ministry of Finance has extended a helping hand to businesses, recognizing the challenges faced during earlier GST years and encouraging timely compliance moving forward.

For taxpayers, this is an opportunity to clear backlogs and ensure adherence to GST rules, thereby avoiding further penalties. Businesses are urged to act swiftly and take advantage of this waiver before the deadline of March 31, 2025.