The sudden outbreak of COVID-19 and the nationwide lockdown in March 2020 created an immediate challenge for taxpayers across India. With businesses shut and operations disrupted, it was impossible for companies and individuals to meet their statutory deadlines under the Goods and Services Tax (GST) law. Recognising this, the Government, through the Central Board of Indirect Taxes and Customs (CBIC), issued a series of notifications under Section 168A of the CGST Act, 2017. These notifications provided much-needed relief in the form of extended deadlines, reduced interest, and waiver of late fees.
This blog explains the relaxations in detail, covering return filing extensions, input tax credit adjustments, relief for composition scheme taxpayers, and other measures that gave businesses crucial breathing space during an uncertain period.
1. Background
The Finance Minister had earlier announced relaxations across various compliance areas to reduce the burden on taxpayers during the lockdown. Acting on this, CBIC notified specific relief measures under the GST framework. These were enabled by the powers granted through the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020, which inserted Section 168A into the CGST Act. The provision allowed the government to relax deadlines in case of force majeure events like the pandemic.
2. Details of the relaxations measure
2.1 Dates for filing GSTR 1 & GSTR 3B with certain relaxation from Interest and late fee
One of the most pressing concerns during the lockdown was the filing of periodic GST returns. To address this, the government staggered the relief based on the taxpayer’s turnover.
For taxpayers with turnover above Rs. 5 crores
- The due date for GSTR-3B for February, March, and April 2020 remained the 20th of the following month.
- However, if filed within 15 days from the due date, no interest was charged.
- Beyond this, a reduced interest of 9% per annum applied until 24 June 2020.
- The late fee was waived, provided returns were filed within the relaxed timelines.
- GSTR-1 filing deadlines for February to May 2020 were extended until June.
For taxpayers with turnover up to Rs. 5 crores
- The due dates for GSTR-3B originally set in March, April, and May 2020 were shifted to late June or early July, depending on the state of registration.
- No interest or late fee applied if returns were filed within these extended timelines.
- GSTR-1 filings for the same period also received extensions, with late fees waived if filed by the revised due dates.
Key clarifications from CBIC
- If GSTR-3B was not filed by 24 June 2020, then normal interest of 18% per annum and regular late fees became applicable.
- Thus, timely filing within the relaxed dates was critical to actually benefit from the relief.
This step ensured that while the government gave taxpayers more time, it also encouraged them to comply within a reasonable window, balancing relief with revenue considerations.
2.2 Relaxation under Rule 36(4) of CGST Rules, 2017 – Reconciliation with GSTR 2A
Another major hurdle for businesses was the restriction under Rule 36(4), which required taxpayers to match the input tax credit (ITC) claimed in GSTR-3B with the details uploaded by suppliers in GSTR-2A.
During the pandemic, when vendors themselves faced difficulties in timely compliance, strict application of this rule would have caused unnecessary hardship.
To address this:
- Taxpayers were allowed to avail ITC in their GSTR-3B for February to August 2020 without reconciling with GSTR-2A.
- A cumulative adjustment of ITC based on reconciliation was to be done in the September 2020 return.
This temporary relaxation kept the credit chain flowing and prevented working capital blockages, while still ensuring final reconciliation within the financial year.
2.3 Relaxation to taxpayers under Composition Scheme
Small taxpayers registered under the composition scheme also faced difficulties in meeting deadlines. To support them, several extensions were announced:
- CMP-02 (intimation for opting into composition scheme for FY 2020-21) was extended from 31 March 2020 to 30 June 2020.
- ITC-03 (statement of ITC reversal on opting for composition scheme) was extended from 31 May 2020 to 31 July 2020.
- CMP-08 (quarterly payment of tax for Jan–March 2020) was pushed from 18 April to 7 July 2020.
- GSTR-4 (annual return for FY 2019–20) was extended from 30 April to 15 July 2020.
These measures gave small businesses more time to comply without worrying about penalties at a time when cash flows were severely strained.
2.4 Other relief measures
Beyond return filing, the government also extended timelines for a wide range of compliance activities under GST.
- Any action, notice, approval, appeal, or filing due between 20 March and 29 June 2020 was deemed extended up to 30 June 2020. This included proceedings, replies, furnishing of documents, and other statutory requirements.
- However, certain key provisions were excluded from this extension, such as compliance on time and value of supply, issue of tax invoices, e-way bill requirements, and due dates for GSTR-1 and GSTR-3B.
Specific reliefs included:
- If an e-way bill expired between 20 March and 15 April 2020, its validity was automatically extended to 30 April 2020.
- The due dates for filing TDS returns under Section 51, TCS returns under Section 52, and ISD returns for March to May 2020 were extended until 30 June 2020.
This blanket extension for most compliances gave businesses valuable breathing time to regroup operations while keeping the tax system functioning.
Conclusion
The relaxation in GST compliances during COVID-19 was not about waiving taxes but about granting flexibility. By extending deadlines, reducing interest rates, and waiving late fees, the government prevented businesses from being penalised for circumstances beyond their control.
The phased and structured approach—differentiating between large taxpayers and small businesses, relaxing ITC reconciliation, and easing rules for composition scheme taxpayers—showed an intent to balance administrative needs with practical realities.
These measures offered stability during the lockdown and ensured that when businesses reopened, they could focus on restarting operations rather than worrying about penalties or compliance defaults.
