CBIC Waives Late Fees for TDS Filers on Delayed GSTR-7 Filings

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CBIC Waives Late Fees for TDS Filers u/s 51 of CGST Act on Delayed GSTR-7 Filings Since June 2021

In a significant relief for taxpayers who are required to deduct tax at source (TDS) under section 51 of the Central Goods and Services Tax (CGST) Act, 2017, the Central Board of Indirect Taxes and Customs (CBIC) has issued Notification No. 23/2024, dated October 8, 2024. This notification waives the late fee for delayed filing of FORM GSTR-7, starting from June 2021, with certain conditions and limits. This comes into effect on November 1, 2024.

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Key Highlights of the Notification

  • Late Fee Cap: The late fee for delayed GSTR-7 filings is capped at ₹25 per day, with a maximum of ₹1,000.
  • Full Waiver for Nil TDS: If no tax was deducted at source (TDS) during a given month, the late fee is fully waived for that period.
  • Applicability: This waiver applies to registered persons obligated to deduct TDS under section 51 of the CGST Act and who delayed filing GSTR-7 returns from June 2021 onwards.
  • Legal Basis: The waiver is issued under section 128 of the CGST Act, which gives the government authority to reduce or waive fees for non-compliance with tax filing deadlines.

Understanding TDS Filers and GSTR-7

What is GSTR-7?

GSTR-7 is a monthly return that must be filed by persons who are required to deduct tax at source under section 51 of the CGST Act. It details the TDS deducted, any tax payable or refunded, and other particulars.

Who Are TDS Filers?

TDS filers include government departments, public sector undertakings, and other entities registered under the CGST Act who are responsible for deducting tax while making payments to suppliers of goods and services.


Late Fee Waiver: A Closer Look

Late Fee Cap and Limitations

For those filing their GSTR-7 returns late, the CBIC has capped the late fee at ₹25 per day, subject to a maximum of ₹1,000. This reduces the financial burden on taxpayers who may have faced significant penalties for previous delays.

Full Waiver for Nil TDS Filings

For months where no TDS was deducted, taxpayers will receive a full waiver of the late fee. This ensures that entities that had zero TDS activity during a specific period aren’t penalized unnecessarily.


Effective Date and Impact

When Does the Notification Come into Force?

The notification comes into effect on November 1, 2024, giving taxpayers adequate time to comply with the updated provisions and take advantage of the waiver.

Impact on Businesses

This waiver is expected to bring substantial relief to businesses, including public sector units and government departments, which are responsible for deducting tax at source. By capping the late fee and offering full waivers in some cases, CBIC aims to encourage timely compliance while easing the financial strain on taxpayers.


Compliance Guidelines

What Should Taxpayers Do?

Registered persons required to deduct TDS under section 51 of the CGST Act must ensure timely filing of GSTR-7 to avoid penalties. Those who have delayed filings since June 2021 are encouraged to take advantage of the waiver. Consulting with a tax professional is advisable to ensure full compliance with the revised filing rules.


Legal Framework and Conditions

Section 128 of the CGST Act

Under section 128 of the CGST Act, the government has the authority to waive or reduce late fees imposed for non-compliance. This legal provision forms the basis for CBIC’s current notification, allowing taxpayers to avoid significant penalties for previous filing delays.

Limits and Conditions

The waiver applies only to those who are required to file GSTR-7 returns and who were delayed in doing so from June 2021 onwards. Conditions, such as the ₹25 per day cap, ensure fairness and consistency in the application of the waiver.


Impact on Future Filings

This notification highlights the government’s intent to reduce the burden on taxpayers while promoting compliance. The reduced fees and waivers should serve as a reminder to all entities that timely filings are crucial to avoid future penalties. The CBIC is using this waiver as a means to foster better tax practices across businesses.


Common Errors to Avoid in GSTR-7 Filings

  1. Incorrect TDS Amount: Ensure the correct tax amount is deducted before filing.
  2. Wrong Details of Deductee: Double-check details to avoid mismatches that may delay processing.
  3. Missed Filing Deadline: Always be mindful of the filing deadline to prevent unnecessary penalties.
  4. Inaccurate Return Figures: Ensure the accuracy of reported figures to prevent notices or audits.

Conclusion

The CBIC’s decision to waive late fees for TDS filers under section 51 of the CGST Act is a welcome move for businesses struggling with compliance due to delays in filing GSTR-7. This notification is part of the government’s broader effort to make tax compliance easier for entities across India. By implementing clear guidelines and providing ample time for compliance, the CBIC has significantly reduced the financial burden on taxpayers while encouraging timely filings in the future.


FAQs

  1. What is GSTR-7?
    GSTR-7 is a monthly return that registered TDS filers must submit to report tax deducted at source under the CGST Act.
  2. What is the late fee for delayed GSTR-7 filing?
    The late fee is capped at ₹25 per day, with a maximum of ₹1,000.
  3. Who qualifies for the waiver of late fees?
    Registered persons who delayed filing GSTR-7 from June 2021 onwards can benefit from the waiver.
  4. When does the late fee waiver come into effect?
    The waiver is effective from November 1, 2024.
  5. Is there a full waiver for months with no TDS deductions?
    Yes, if no TDS was deducted during a specific month, the late fee is fully waived for that period.
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