The Ministry of Corporate Affairs and Department of Revenue (DoR) representatives have initiated talks regarding permitting companies who are undergoing the Insolvency and Bankruptcy Code (IBC) to pay current GST charges without paying the mandatory dues from the past. With this step, the government anticipates making the overall bankruptcy resolution process hassle-free and straightforward.
Currently, as per the GST framework, a firm is not allowed to file current tax dues if the firm has dues to be cleared from the past. In case of non-compliance, penal action will be initiated even in scenarios wherein the GST registration has been cancelled, or the insolvency resolution process has been initiated.
Industry-related organisations have persuaded the government regarding this issue; they are requesting the government to accept the current GST dues while giving a moratorium for the dues from the past.
Financial experts believe that both IBC and GST needs to be aligned. It is vital that when the corporate insolvency resolution process (CIRP) is taking place, it has to be insulated from the company’s GST compliances of the past.
Also, another fact needs to be recognised concerning taxpayers who have missed completing their GST payments/GST filings in time because of genuine reasons. Such kind of defaulters need to be imposed with a small penalty, and the primary focus should rely on avoiding business disruptions.
Officials will unveil a framework concerning this matter soon. A procedure will be chalked out, and officials are planning to meet this week for finalising the contours.
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Bhavana is a Senior Content Writer handling the GST vertical. She is committed, professional, and has a flair for writing. When away from work, she enjoys watching movies and playing with her son. One thing she can’t resist is SHOPPING! Her favourite quote is: “Luck is what happens when preparation meets opportunity”.