Aiming to cash in on GST success, State to fast-track arrear disputes

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Two years after the Goods and Services Tax (GST) was rolled out, the State government is looking to maximise the gains from it. In his Budget speech on Tuesday, State Finance Minister Sudhir Mungantiwar announced measures to ensure early resolution of pre-GST regime disputes and changes in tax laws to facilitate ease of doing business. Mr. Mungantiwar announced amendments to the ordinance meant for collection of VAT and other tax arrears. He also extended the Maharashtra Settlement of Arrears of Tax Interest, Penalty or Late Fee Ordinance, 2019, by a month, citing the “overwhelming response” to it. The government had announced the amnesty scheme in its Interim Budget in February, and the subsequent ordinance has proved effective in allowing businesses to proceed and evaluate disputes, and avail its benefits by liquidating arrears under the VAT and other taxes administered by the State Tax Department. As of Monday, the government has received 15,650 applications, involving revenue receipt of ₹750 crore, under the scheme.

The minister said, “The GST regime has removed the barriers between States. As the GST system stabilises, trade and industry sectors are realising its benefits. The tax base of Maharashtra has increased from 7.75 lakh to 15.50 lakh. In light of these facts, I propose some amendments to the ordinance.” The finance minster increased the time limit of the scheme by a month, with first phase now ending on July 31 instead of June 30 and the second on August 31. The government has also proposed determining a ratio between the undisputed tax and disputed tax amounts so as to clear ambiguity in the scheme. The statutory order says that any amount paid is first to be adjusted against the tax and then towards interest, penalty and late fee.

The government also proposes to tweak the Professional Tax Act and ensure reduced periodicity of filing returns. The minister proposed all enrolment certificate holders be allowed to pay Professional Tax up to the end of the respective year. Currently, they are liable to pay tax every year in advance up to June 30. The government also withdrew the penalty for default under the Professional Tax regime. The finance minister also proposed changes to the VAT currently applicable only on six commodities by exempting dealers with turnover more than ₹1 crore and tax liability less than ₹25,000 from submitting an audited account. “I am sure this proposal would spare most VAT dealers of the compliance cost,” Mr. Mungantiwar said.

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