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With 9% interest on delayed payment, taxpayers avoid deferring GST filings

Dipak Mondal     April 16, 2020

Many large taxpayers, those with annual turnover of Rs 5 crore or more, are not availing the extension for paying GST and filing returns as many of them find the 9 per cent per annum interest from the due date too exorbitant.

The government has, in order to lessen the compliance burden on businesses given the outbreak of coronavirus, extended the dates of filing GSTR 3B returns due in March, April and May 2020 to last week of June 2020. Usually, the date for filing returns for a particular month is 20th of the next month. So, for March, the date of filing returns in 20 April, and that for April is 20 May.

Those having aggregate annual turnover less than Rs 5 crore, no interest but late fee and penalty will be charged. But for those with turnover of Rs 5 crore or more, an interest at the reduced rate of 9 per annum from due date (against the current rate of 18  per cent) will be charged.

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For businesses with large tax liabilities, delaying the tax payment by three months would mean a large interest outgo, and hence those taxpayers, who have sufficient cash-in-hand are planning to pay the taxes and file returns on time.

"The industry has taken a mixed approach on the delayed return filing, depending upon the cash flow situation. The comparison which is done is the 9 per cent interest (on late payment of GST) and the interest on bank loan. However, filings have slowed down on an overall basis," says Ritesh Kanodia, partner, Dhruva Advisors.

But not all businesses are weighing options between paying interest on late payment of GST and interest on bank loan. For many SMEs with turnover of Rs 5 crore or more, the question is whether to pay the salaries or file GST returns.

Nidhi Goyal, managing partner, Avinav Conculting, says: "Those SMEs which have enough cash flow to pay salaries would like to pay GST liabilities on time and save on the 9 per cent interest cost that they otherwise would incur."

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Some businesses are also taking advantage of the fact that the load on GST Network, the IT backbone of the GST regime, will be somewhat less, and are finishing some of the compliances despite the extension of dates.

Rajat Mohan, partner in chartered accountancy firm AMRG & Associates, says unlike in normal times around the due dates, one invariably face problems in filing returns, right now the GST Network is working smoothly.

Rajesh Gupta, Co-Founder & Director, Busy Infotech, says: "Due to lockdown, business transactions have been reduced and left with only 10-20 per cent 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 with 10-13 days of the first phase of lockdown."

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