Faced with a revenue crisis of sorts, the government seems to have become penny-wise, especially when it comes to GST collection. The government is sending notices to taxpayers for dues as low as a few paise.However, that puts taxpayers in a jam.
The government recently clarified that those filing returns after the due dates should also be paying interest on the taxes due and ordered recovery of Rs 46,000 crore as interest from those who filed their returns after the due dates.
Now the taxpayers have been receiving notices asking for payment of interests, which in some cases could be as low as Rs 2 or Rs 6.
In one such notice sent to a brokerage firm, the notice reads: "Records indicate that you have filed your GSTR-3B return for the period 2019-20 after due dates, in which you have not calculated and paid your interest liability under section 50 of the CGST Act, 2017. You are advised to deposit the interest amount of Rs 5.9858630140000004, calculated as per provisions of section 50 of the CGST Act, 2017."Interestingly, this leaves the GST payers in a fix. While the GST notice has demanded money in 16 decimal points, even the bank online systems do not have more than 2 decimal points for corporate customers in the file upload system (for retail customers it's rounded off to nearest Rupee).
According to Central Government Rules, since April 1, 1987, government transactions "involving fractions of a rupee shall be brought to account by
rounding off to the nearest rupee (fraction of 50 paise and above to be rounded off to the next higher rupee
and fraction of less than 50 paise to be ignored)".
The Rules specify that, "The only type of transactions which have to involve paise would be cash transactions for petty purchases or sales which are reflected in a primary record like cash book".
An RBI circular dated July 1, 2015 also states uses an identical language: "All transactions including payment of interest on deposits/charging of interest on advances, should be rounded off to the nearest Rupee i.e., fractions of fifty paise and above shall be rounded off to the next higher Rupee and fractions of less than fifty paise shall be ignored".
The notice further warns of legal action if the amount is not deposited. "In case the opportunity for voluntary compliance as suggested is not availed, appropriate legal action for recovery of interest due to delayed filing of return shall be initiated," says the notice.
Rajat Mohan, partner in CA firm AMRG & Associates, whose clients also received similar notices, says that the notices seem to have been computer-generated and hence notice for non-payment of dues as low as Rs 6. Nonetheless, he says, his clients will make the payments.
Pritam Mahure, a Pune-based CA, says: "It's unfortunate that taxpayers are expected to invest time in replying these kinds of avoidable notices." One of his clients received notice for payment of a few paise.