GST Penalty: Introduction and Types | Tally for GST
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Introduction to GST Penalty

The following are the various offences and penalties under GST charged for non-compliance:

Late Fee

The GST late filing penalty has been specified as follows:

  • A person fails to furnish details of outward or inward supplies, monthly return or final return by the due date – The GST penalty for late filing is INR 100 for every day during which the failure continues, subject to a maximum of INR 5,000
  • A person fails to furnish the annual return by the due date – The GST late filing penalty is INR 100 for every day during which the failure continues, subject to a maximum of quarter percent of the person’s turnover in the state where he is registered

Interest

While, the GST penalty interest rates on the applicable offences is yet to be notified, the GST late payment penalty has been specified as follows:

  • A person liable to pay tax fails to pay the tax - Interest on the tax due will be calculated from the first day on which the tax was due to be paid, as per the rules of GST payment
  • A person makes an undue or excess claim of input tax credit or undue or excess reduction in output tax liability - Interest on the undue excess claim or undue or excess reduction
  • A recipient of a service fails to pay to the supplier of the service the amount towards the value of the service, along with tax payable thereon, within 3 months from the date of issue of invoice by the supplier - Interest on the amount due will be added to the recipient’s liability

Cancellation of Registration

The circumstances under which a person’s registration may be cancelled are:

  • A regular dealer has not furnished returns for a continuous period of 6 months.
  • A composition dealer has not furnished returns for 3 quarters.
  • A person who has taken voluntary registration has not commenced business within 6 months from the date of registration.
  • Registration has been obtained by fraud, wilful misstatement or suppression of facts.

Confiscation of Goods and/or Conveyances

For the following offences, the penalty specified is confiscation of goods and/or conveyances and levy of fine - which will be INR 10,000 or an amount equal to the tax evaded:

  • A person does not account for the goods on which he is liable to pay tax.
  • A person supplies or receives goods in breach of any provisions or rules with the intent to evade payment of tax.
  • A person supplies any goods liable to tax without having applied for registration.
  • A person uses a conveyance for carriage of taxable goods in breach of any provisions or rules.

Imprisonment and Fine

The circumstances under which imprisonment is applicable are:

  • Obstructing or preventing any officer in the discharge of his duties, or tampering with or destroying any evidence or documents – 6 months imprisonment with fine
  • Failure to supply any information required under the law or supplying false information - 6 months imprisonment with fine
  • Tax evaded or input tax credit wrongly availed or refund wrongly taken of an amount exceeding INR 50 Lakhs, but not exceeding INR 1 Crore - Imprisonment which may extend to 1 year with fine
  • Tax evaded or input tax credit wrongly availed or refund wrongly taken of an amount exceeding INR 100 Lakhs, but not exceeding INR 2.5 Crores - Non-bailable imprisonment which may extend to 3 years with fine
  • Tax evaded or input tax credit wrongly availed or refund wrongly taken of an amount exceeding INR 2.5 Crores - Non-bailable imprisonment which may extend to 5 years with fine

Other Penalties

Offences on which penalty will be levied have been specifically laid down under the rules of GST penalty in India.

  • Penalty if the person commits the following specified offences – INR 10,000 or an amount equivalent to the tax evaded
  • o Supplies goods and/or services without issuing an invoice or issues an incorrect or false invoice
  • o Issues an invoice without supply of goods and/or services/li>
  • o Collects tax but fails to pay the same to the Government beyond a period of 3 months from the date on which the payment becomes due/li>
  • o Who is an e-commerce operator fails to collect tax or collects lesser than the amount required to be collected or fails to pay the tax to the Government
  • o Takes input tax credit without actual receipt of goods and/or services either fully or partially
  • o Obtains refund of tax by fraud
  • o Falsifies or substitutes financial records or produces fake accounts and/or documents or furnishes a false return
  • o Liable to be registered, but fails to obtain registration
  • o Furnishes false information with regard to registration
  • o Transports taxable goods without documents
  • o Fails to maintain books of accounts and documents
  • o Suppresses turnover leading to evasion of tax
  • o Issues an invoice or document by using the identification number of another person
  • Penalty if a person aids or abets any of the offences listed above – May extend up to INR 25,000
  • Penalty if a person who commits an offence for which penalty is not separately provided under the law – May extend up to INR 25,000