Covid-19-hit businesses feel GST blues

Covid-19-hit businesses feel GST blues

Small businesses may lose GST registration if they don't pay late fee.

Mohan, a civil contractor, recently carried out construction work at a biscuit factory. But the company has held up his payment as he has not filed GSTR-3B returns for October. Unless he files 'nil returns' for the Covid-19 lockdown period with a late fee of Rs 50,000, he cannot file returns for October.

Similarly, Hemachandra Tejas, who runs an office automation business, is unable to take delivery of goods from the market as he is not able to generate e-way bills, which have been blocked for non-filing of returns for the last six months. 

These businessmen did not have any income during the lockdown and had not filed nil GST returns.

They are among 1.75 lakh such businesses which are now facing cancellation of GST registrations, and thereby closure. Until they pay the late fee, they will not be able to regularise their tax filing records and carry out regular business.

According to a government notification, e-way bills will not be generated from December 1 for those businesses that don't file Form GSTR-3B nil returns by paying a late fee for two or more months prior to December 1. Once their registration is cancelled, they will not be able to generate e-way bills, which is mandatory to transport goods, official sources warned.

As of November 24, 74% of the 8.88 lakh GST-registered businesses in Karnataka have filed GST returns. The rest will have to file it by December to avoid cancellation of registrations, said B T Manohar, tax expert, FKCCI.

"Lakhs of registered businesses across the country had shut down during the lockdown period. Due to zero income, they were couldn't pay late fees and file GST returns. They are also unable to maintain business expenses like shop rent, workers’ salaries, etc. They are asking the government to waive late fees so that they can file nil returns and continue with their business," Raghavendra, a chartered accountant, told DH.

"We have been knocking on the doors of all GST officials, the finance minister and even the PMO for relief. So far, no one has come to our rescue," Raghavendra added.

Any decision to waive the late fee can be taken only by the GST Council and the state governments have no role in it, a senior official of the commercial taxes department said.

"Payment of GST has become a burden during this pandemic. GST liability arises on the date of billing, but the payment by clients are due from six-seven months. Even though we didn't receive payment from clients, we need to pay GST before the 20th of the succeeding month, or else we have to pay a huge penalty," said Jayathirth, president, Vipra Business Forum (VBF).

About 20%-30% of VBF members are likely to shut down their business permanently, leading to loss of jobs for thousands of workers, he said.