Tax Insights

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Tax Insights

13 March 2023

Amnesty Scheme, 2023 for pre-GST disputes and reduced VAT rate on ATF in select districts – Maharashtra State Budget for FY 2023-24

In brief

In the clean-up drive to dispose of pre-GST disputes, the State of Maharashtra in its Budget has announced an Amnesty Scheme, 2023 f or matters with stakes up to INR5m. The Budget also announced a reduction in the VAT rate f rom 25% to 18% on aviation turbine fuel (ATF) in the Mumbai, Pune and Raigad districts.

In detail

The State Finance Minister of Maharashtra delivered his budget speech¹ on 9 March 2023. The two key proposals contained in the speech are as follows:

• Amnesty Scheme, 2023 (scheme) for pending pre-GST litigations: Part II of the speech covers the following highlights of the scheme:

- The scheme is to be promulgated vide the Maharashtra Settlement of Arrears of Tax, Interest, Penalty or Late Fee Act, 2023.

- This scheme is applicable to various taxes that the indirect tax department levied before the introduction of the GST law.

- The duration of this scheme will be from 1 May 2023 to 31 October 2023.

- The f ollowing waivers are to be allowed under this scheme:

S. No. Amount in arrears* Waivers to be allowed

i. Up to INR200,000 per year Complete waiver ii. Up to INR5m per statutory order 80% waiver

iii. Arrears above INR5m Scheme not applicable

1 https://beams.mahakosh.gov.in/Beams5/BudgetMVC/MISRPT/HomePage2021.html#

* Arrears of tax, interest, penalty or late fee

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• Reduction of VAT rate on ATF from 25% to 18% in the Mumbai, Pune and Raigad districts.

The takeaways

The amnesty scheme, as announced, indicates that numerous taxpayers would benefit from it, and they would have an opportunity to close their long due pending pre-GST litigations. The scheme merits the attention of all taxpayers who have disputes pending for the pre-GST era in Maharashtra; this is because many large

corporates may also have relatively low stake pre-GST litigation matters pending. The Maharashtra

Government would also benefit from a reduction in the pending cases at various levels in the judicial system.

However, note that actual nuances of the amnesty scheme need to be reviewed carefully once the fine print is rolled out.

The proposal to reduce VAT rate on ATF from 25% to 18% is a substantial and surely a welcome step (even though applicable in only select districts in Maharashtra). This would be a big relief for the air travel industry and will eventually help reduce the air travel and logistics costs for end consumers.

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Tax Insights

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