Taxpayers contesting penalty-only assessments under the Goods and Services Tax (GST) regime continue to await formal notification of a proposed reduction in the mandatory pre-deposit requirement for first appeals.
Despite the GST Council’s recommendation to lower the pre-deposit from 25% to 10% of the penalty amount, the Central Board of Indirect Taxes and Customs (CBIC) has not yet issued the necessary notification to implement this change.
During its 55th meeting on December 21, 2024, the GST Council proposed amending Sections 107 and 112 of the Central Goods and Services Tax (CGST) Act, 2017. This amendment aimed to facilitate the appeals process for cases involving only penalties, without any associated tax demand. The Council suggested reducing the pre-deposit requirement to 10% of the penalty amount to alleviate the financial burden on taxpayers.
However, as of April 29, 2025, the CBIC has not issued a notification to enforce this proposed amendment. Consequently, taxpayers appealing penalty-only orders are still subject to the existing 25% pre-deposit requirement.
In contrast, the CBIC has implemented other changes to pre-deposit requirements. Effective November 1, 2024, the pre-deposit for appeals involving disputed tax amounts was reduced to 10%, with caps lowered to Rs. 20 crore for CGST and SGST, and Rs. 40 crore for IGST. These changes, however, do not extend to penalty-only appeals.
The delay in notifying the reduced pre-deposit for penalty-only appeals has led to uncertainty among taxpayers and professionals. Many are hopeful that the CBIC will soon formalize the amendment, aligning the procedural requirements with the GST Council’s recommendations and providing relief to those challenging penalty assessments.
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