GST Penalties?

What is GST Penalties ?

The GST law has clearly defined descriptions of offenses and the penalties levied in each scenario. This is important information for all business owners, CAs and Tax Professionals as an inadvertent mistake can cause severe consequences. If any of the offenses are committed then a penalty will have to be paid under GST. The principles on which these penalties are based are also mentioned by law.

For late filing

Late filing attracts penalty called late fee. The late fee is Rs. 100 per day per Act. So it is 100 under CGST & 100 under SGST. Total will be Rs. 200/day*. The maximum is Rs. 5,000. There is no late fee on IGST in case of delayed filing.

Along with late fee, interest has to be paid at 18% per annum. It has to be calculated by the taxpayer on the tax to be paid. The time period will be from the next day of filing to the date of payment.

• Incorporation of a New Company

* Subject to changes announced via Notifications. Check out for updates here

For not filing

If you don’t file any GST return then subsequent returns cannot be filed. For example, if GSTR-2 return of August is not filed then the next return GSTR-3 and subsequent returns of September cannot be filed. Hence, late filing of GST return will have a cascading effect leading to heavy fines and penalty.

Offences

There are 21 offenses under GST. The major offenses under GST are:

• Not registering under GST, even though required by law. (Read our article for the list of those who have to register mandatorily under GST)

• Supply of any goods/services without any invoice or issuing a false invoice

• The issue of invoices by a taxable person using the GSTIN of another bona fide taxpayer

• Submission of false information while registering under GST

• Submission of fake financial records/documents or files, or fake returns to evade tax

• Obtaining refunds by fraud

• Deliberate suppression of sales to evade tax

• Opting for composition scheme even though a taxpayer is ineligible

For the 21 offenses with no intention of fraud or tax evasion

An offender not paying tax or making short payments must pay a penalty of 10% of the tax amount due subject to a minimum of Rs. 10,000.

Consider — in case tax has not been paid or a short payment is made, a minimum penalty of Rs 10,000 has to be paid. The maximum penalty is 10% of the tax unpaid.

Consider — in case tax has not been paid or a short payment is made, a minimum penalty of Rs 10,000 has to be paid. The maximum penalty is 10% of the tax unpaid.

An offender has to pay a penalty amount of tax evaded/short deducted etc., i.e., 100% penalty, subject to a minimum of Rs. 10,000.

Additional penalties as follows:

Tax amount involved:

• 100-200 lakhs- Jail term Upto 1 year

• 200-500 lakhs- Jail term Upto 3 years

*Fine In all three cases.