Certain GST offences to be decriminalised and compounding charges to be lowered | The Financial Express

Certain GST offences to be decriminalised and compounding charges to be lowered

“We are also looking at some of the provisions which are overlapping with the Indian Penal Code which need not be in the GST law.”

Certain GST offences to be decriminalised and compounding charges to be lowered
Recently, the GST investigation unit of the central board of indirect taxes and customs had advised field formations to launch prosecution against offenders in cases where the amount of GST evasion or misuse of the input tax credit is more than Rs 5 crore.

Aiming to provide friendly taxpayer services, the Centre is working on decriminalising certain offences under the goods and services tax (GST) by raising the threshold limit for launching prosecution as well as making compounding charges affordable, additional revenue secretary Vivek Aggarwal said on Wednesday.

Recently, the GST investigation unit of the central board of indirect taxes and customs had advised field formations to launch prosecution against offenders in cases where the amount of GST evasion or misuse of the input tax credit is more than Rs 5 crore.

“We have Section 132 under CGST Act which criminalises illegal credit for GST evasion. The threshold level (for launching prosecution) are being reconsidered,” Aggarwal said at an Assocham event here.

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“We are also looking at some of the provisions which are overlapping with the Indian Penal Code which need not be in the GST law.”

He said the compounding charges for offences under GST would also be lowered so that taxpayers are encouraged to compound their offences instead of going to litigation.

Under GST Act, the amount payable for compounding of offences shall be 50% of the tax amount involved subject to a minimum of Rs 10,000. The maximum amount for compounding is 150% of the tax or Rs 30,000, whichever is higher.

“The compounding provision in GST is prohibitive. That’s why there is zero compounding for all cases under GST. That is being relooked at so that it becomes affordable and compounding becomes a first or better choice for the taxpayer,” Aggarwal said.

“These processes have been initiated and in due course, these will be implemented with the approval of the GST Council and legislatures,” he said. The GST Council may consider these proposals in the next GST Council meeting.

On the direct tax side, the official said the revenue department will be finalizing a policy paper by end of this month on managing litigations.

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