In recent months, the Central Board of Indirect Taxes and Customs (CBIC) has introduced pivotal updates regarding Section 128A of the Central Goods and Services Tax (CGST) Act, 2017. Aimed at relieving taxpayers from burdensome tax demands spanning from July 1, 2017, to March 31, 2020, this section provides the opportunity for the waiver of certain penalties and interest. The CBIC’s Circular No. 248/05/2025-GST, dated March 27, 2025, outlines key clarifications that are essential for individuals and businesses navigating compliance with GST regulations. This article provides a comprehensive overview of these changes, their implications, and answers to frequently asked questions (FAQs).
What is Section 128A?
Section 128A of the CGST Act was enacted to provide relief to taxpayers facing demands for taxes during a tumultuous period in India’s GST implementation. This section allows for the waiver of interest or penalty associated with tax demands raised under Section 73. By facilitating a more manageable approach to tax liabilities, Section 128A aims to empower businesses with greater financial stability and ease of compliance.
Key Highlights from Circular No. 248/05/2025-GST
The recent circular addresses several critical issues concerning the implementation of Section 128A, including:
- Eligibility of Payments Made via GSTR-3B:
- Taxpayers are reassured that payments made through FORM GSTR-3B before the effective date of Section 128A (i.e., November 1, 2024) will still qualify for the benefits of the section, provided they relate directly to the tax demands in question.
- Partial Demand Coverage:
- In instances where tax notices cover periods both within and outside the scope of Section 128A, taxpayers are permitted to make payments only for the periods falling under the section. Subsequently, they may file an application through FORM SPL-01 or FORM SPL-02 to withdraw appeals for the periods outside of the scope.
- Verification and Compliance:
- All claims for benefits under Section 128A must undergo verification by the appropriate tax officers, ensuring compliance with the prescribed regulations and guidelines.
Steps for Taxpayers
Taxpayers wishing to avail themselves of the benefits under Section 128A should consider the following steps:
- Document Payments: Ensure that all payments made are properly documented, particularly those intended to seek relief under Section 128A prior to November 1, 2024.
- File the Appropriate Forms: Adhere to the prescribed procedures for filing Forms SPL-01 or SPL-02 regarding the withdrawal of appeals related to tax demands for periods covered under Section 128A.
- Stay Updated: Regularly review CBIC’s official notifications for further updates on GST provisions, and consider seeking guidance from tax professionals for personalized advice and clarification.
Frequently Asked Questions (FAQs)
Q1: What is the purpose of Section 128A of the CGST Act?
A: Section 128A is designed to provide relief to taxpayers by allowing for the waiver of interest and penalties associated with tax demands raised under Section 73 during the period from July 1, 2017, to March 31, 2020.
Q2: Can taxpayers avail the benefits if they paid tax through GSTR-3B?
A: Yes, taxpayers who made payments through FORM GSTR-3B prior to November 1, 2024, are eligible to avail the benefits under Section 128A, provided the payments were intended for the specific demands in question.
Q3: What forms should taxpayers use to withdraw appeals related to tax demands partially covered under Section 128A?
A: Taxpayers must file either FORM SPL-01 or FORM SPL-02 to indicate their intent to withdraw appeals for periods outside the scope of Section 128A after making the necessary payments.
Q4: Are there any verification requirements for taxpayers seeking relief under Section 128A?
A: Yes, any claims made by taxpayers for the benefits under Section 128A must be verified by the proper tax officers to ensure compliance with regulations.
Q5: What happens if a taxpayer fails to comply with the new provisions under Section 128A?
A: Non-compliance may result in the taxpayer not being eligible for the benefits provided under Section 128A, including the waiver of penalties and interests, and could potentially lead to further legal implications.
Q6: How can taxpayers stay informed about changes to GST rules and provisions?
A: Taxpayers should regularly check the CBIC’s official website and other reliable tax advisory platforms. Engaging with qualified tax professionals can also provide timely updates and necessary guidance.
Conclusion
The clarifications provided in Circular No. 248/05/2025-GST present significant opportunities for taxpayers to mitigate financial burdens stemming from past tax demands under the CGST Act. By understanding the implications of Section 128A and following the prescribed procedures, businesses can take proactive steps towards compliance and relief. For tailored advice or further assistance with GST-related matters, engaging with seasoned tax advisors is recommended.
For ongoing updates and deeper insights into GST provisions, stakeholders are encouraged to continuously monitor the CBIC’s official notifications and advisories.
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