No compounding under GST yet due to steep penalties, may slash them to curb tax disputes. The Union Budget 2023-24 will include steps to decriminalise taxation laws, remove provisions in the Income Tax, GST and Customs laws that are similar to sections that can be invoked under the Indian Penal Code (IPC), and reduce ‘prohibitive’ compounding charges under GST, a senior Finance Ministry official said. The compounding provisions in GST, which entail penalties from 50% to 150% of the tax amount involved, make it “impossible for anybody to pay”, said Vivek Aggarwal, Additional Secretary in the Department of Revenue. As a result, “there has been zero compounding in India till now for all cases filed under the GST Act,” he added.
