CBIC Clarifies Section 128A Waiver Rules Under CGST Act

The Central Board of Indirect Taxes and Customs (CBIC) has issued comprehensive guidance regarding the implementation and applicability of Section 128A of the Central Goods and Services Tax (CGST) Act, 2017. This new section, effective from November 1, 2024, introduces provisions for the waiver of interest, penalties, or both, under specific circumstances related to tax demands. Here’s a detailed overview:

Applicability of Section 128A

Section 128A applies to demands raised under Section 73 of the CGST Act for the financial years 2017-18, 2018-19, and 2019-20. This provision aims to provide relief to taxpayers by waiving interest and penalties, provided they meet the stipulated conditions. GST Registration

Rule 164 Inserted into CGST Rules, 2017

To streamline the process, Rule 164 has been incorporated into the CGST Rules, 2017, effective November 1, 2024, through Notification No. 20/2024-Central Tax dated October 8, 2024.

CBIC Clarifies Section 128A Waiver Rules Under CGST Act

Key Features of Rule 164:

Procedures for Waiver Application: Taxpayers must follow the prescribed steps to apply for waivers under Section 128A.
Conditions for Closure of Proceedings: Only taxpayers fulfilling all conditions outlined in Rule 164 will be eligible for relief.

Notification of Deadline

Through Notification No. 21/2024-Central Tax dated October 8, 2024, CBIC has specified March 31, 2025, as the deadline for availing relief under Section 128A. This ensures a defined window for taxpayers to act.

What Does This Mean for Taxpayers?

This initiative reflects the government’s efforts to ease compliance burdens and resolve legacy disputes. Taxpayers should:

Review Eligibility: Check if they fall within the specified financial years and meet the conditions. GST Filing
Act Promptly: Ensure all necessary documentation is prepared and submitted before the March 31, 2025 deadline.
Seek Guidance: Consult with tax professionals to navigate the application process under Rule 164 effectively.

The introduction of Section 128A and Rule 164 is a progressive step toward simplifying GST compliance and providing much-needed relief to businesses. Taxpayers should leverage this opportunity to settle disputes and align with the regulatory framework.

For further updates and clarifications, taxpayers are encouraged to refer to the notifications and consult with GST experts.