Indirect Tax Alert

Indirect Tax Alert - Kerala Government announces Amnesty Scheme

 

In the recent Kerala State Budget 2024, the Government of Kerala has announced an Amnesty Scheme, 2024 (Amnesty Scheme) for the settlement of tax arrears under the following laws (specified legislations):

  • Kerala Surcharge on Taxes Act, 1957 (KST Act)

  • Kerala General Sales Tax Act, 1963 (KGST Act)

  • Kerala Value Added Tax Act, 2003 (KVAT Act)

  • Central Sales Tax Act, 1956 (CST Act)

  • Kerala Agricultural Income Tax Act, 1991 (KIT Act)

  • Kerala Tax on Luxuries Act, 1976 (KTL Act).

The primary objective of the Amnesty Scheme is to provide relief to taxpayers by offering them an opportunity to settle their tax arrears due under the specified legislations, pertaining to the assessment years up to 2017-18.

Salient features of the Amnesty scheme

1. Applicability of the Amnesty Scheme: The Amnesty Scheme is applicable to the settlement of tax arrears under the specified legislation. However, the Amnesty Scheme is not applicable with respect to Turnover Tax payable on sale of foreign liquor (under Section 5(2) of the KGST Act) and taxes payable by dealers at compounded rates (under Section 7 of the KGST Act).

2. Benefits of the Amnesty Scheme:
 a. 100% waiver of penalties and interest on the arrears under the Amnesty Scheme.
 b. Under the Amnesty Scheme, the waiver of arrears is divided into four slabs based on the tax amount involved as mentioned in the below table:

Slab

Tax Arrears (in INR)

Tax Waiver under Amnesty

Arrears under Appeal

Arrears not under Appeal

Slab 1

Up to 50,000

100%

Slab 2

50,000 to 10 lacs

70% of tax amount

Slab 3

10 lacs to 1 Crore

60% of tax amount

50% of tax amount

Slab 4

More than 1 Crore

30% of tax amount

20% of tax amount

3. Commencement of the Amnesty Scheme: 1 August 2024

4. Further, the Kerala Amnesty Rules, 2024 (Amnesty Rules) have been notified on 31 July 2024 detailing the administration and other related procedures pertaining to the Amnesty Scheme. The key provisions of the Amnesty Rules are summarised below:
a. Application for settlement

  • The application for applying for amnesty is to be filed electronically within 60 days from the date of commencement of the Amnesty Scheme (i.e., from 1 August 2024) through the Amnesty portal in Form NSTY-I along with the proof of payment.

  • If the amount is not paid within the aforesaid prescribed period, the same may be further extended not later than 31 December 2024.

  • Separate applications must be filed for each specified order.

In case a decision or order is pending to be finalised, an applicant shall be eligible to apply without making any payment, and the amount payable in those cases shall be paid within 60 days from the date of service of such modified orders.

b. Determination of the amount payable by the applicant

  • In case of any shortfall in the amount paid by the applicant while filing the application for the Amnesty Scheme, the designated authority shall demand such short-paid amount in Form NSTY-III.

  • The applicant shall file a reply along with the proof of payment within 60 days of receipt of the notice.

c. Certificate of Settlement of arrears

  • On being satisfied, the designated authority will settle the arrears and issue a certificate of settlement in Form NSTY-IV. 

d. Refusal of settlement of arrears

If there is any defect or omission in the application other than on account of short payment, the designated authority shall intimate the same to the applicant in Form NSTY-VI. Subsequently, the applicant shall file a fresh application after rectifying such defect or omission within 7 days of receipt of intimation.

e.Time limit for payment

  • The time limit for payment of arrears other than the tax paid along with the application shall be on or before 31 March 2025.

  • In the case of a decision or order which is pending to be finalised, the payment of tax is to be made within the prescribed period.

f. Appeals

  • Any person aggrieved by the order under the Amnesty Scheme shall file an appeal in Form NSTY-IX within 30 days from the date of communication of the order. In case of sufficient cause, this period may be extended to a further period not exceeding 30 days. 

g. Revocation of Certificate and Order

  • Where it appears to the designated authority that the applicant has obtained the certificate of settlement by suppressing any material information or by furnishing any incorrect or false information, the designated authority may, within a period of 2 years from the date of issue of the certificate, revoke such certificate in Form NSTY-X. 

h. Mode of Payment

i. Service of notices or orders

  • Any notice, summon or order under the Amnesty proceedings will be served on the applicant either by registered post or through the amnesty portal. A copy will also be sent to the applicant's email address, if available.


[Source – Notification No. No. 8/Leg. A2/2024/Law dated 28 July 2024 and G.O.(P) No.100/2024/TD dated 31 July 2024]