GST Penalties | Taxation for CA Intermediate PDF Download

 Page 1


 
 
GST Penalties 
To prevent tax evasion and corruption, GST has brought in strict provisions for offenders 
regarding penalties, prosecution, and arrest. 
What does penalty mean? 
The word “penalty” is not specifically defined in GST and so it takes the meaning from various 
judicial pronouncements and principles of jurisprudence. 
A penalty is a punishment imposed by law for committing an offence or failing to do something 
that was the duty of a party to do. 
A penalty can be corporal or pecuniary, civil or criminal. 
Both corporal (jail) and pecuniary (monetary) penalties are applicable under GST. 
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. 
 
Penalties 
For late filing 
Late filing attracts penalty called late fee. The late fee is 100 per day per Act. So it is 100 ` `
under CGST & 100 under SGST. Total will be 200/day. The maximum is 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 (26
th
 / 29 
th
Aug.) to the date of payment. 
 
For not filing 
If the assessee is not filing 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 
Page 2


 
 
GST Penalties 
To prevent tax evasion and corruption, GST has brought in strict provisions for offenders 
regarding penalties, prosecution, and arrest. 
What does penalty mean? 
The word “penalty” is not specifically defined in GST and so it takes the meaning from various 
judicial pronouncements and principles of jurisprudence. 
A penalty is a punishment imposed by law for committing an offence or failing to do something 
that was the duty of a party to do. 
A penalty can be corporal or pecuniary, civil or criminal. 
Both corporal (jail) and pecuniary (monetary) penalties are applicable under GST. 
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. 
 
Penalties 
For late filing 
Late filing attracts penalty called late fee. The late fee is 100 per day per Act. So it is 100 ` `
under CGST & 100 under SGST. Total will be 200/day. The maximum is 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 (26
th
 / 29 
th
Aug.) to the date of payment. 
 
For not filing 
If the assessee is not filing 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 which is as below. 
Tax amount involved 100 - 200 lakhs 200 - 500 lakhs Above 500 lakhs 
Jail term Upto 1 year Upto 3 years Upto 5 years 
Fine In all three cases 
Cases of fraud also face penalties, prosecution, and arrest. 
Interest on Late Payment of GST Due 
Interest has to be paid by every taxpayer who: 
• Makes a delayed GST payment i.e. pays GST after the due date. 
• Claims excess Input Tax Credit 
• Reduces excess Output Tax Liability 
Currently, GST has to be paid at the time of filing GSTR-3B and GSTR-4. 
If GST is not paid within the due dates of filing return Interest at following rates has to be paid: 
Particulars Interest 
Tax paid after due date 18% p.a. 
Excess ITC Claimed or excess reduction in Output Tax 24% p.a. 
The Interest has to be calculated from the next day on which tax was due. 
For example, a taxpayer fails to make a tax payment of 10,000 for the month of December `
2017 (due date  20 Jan 2018). He makes the payment on 20 Feb 2018. Interest will be –
th th
calculated as follows: 
`10,000 * 31 days/365 * 18% = 153. `
Thus it is important to make tax payment and file GST Return within due dates. 
 
Notice for Not Filing GST Return 
If a taxpayer fails to furnish GST returns for more than a month or two, a GSTR-3A notice may 
be issued by the GST authorities. On issuing GSTR-3A notice, the taxpayer is provided a period 
of 15 days to regularize GST return filing by paying any penalty as shown on the GST portal. 
If the pending GST returns are not filed within 15 days of GSTR-3A notice, then the GST 
Officer could assess tax liability, fines and penalty based on the information available and make 
the same payable by the taxpayer. 
Hence, on receiving GSTR-3A notice, it is advisable for all GST taxpayers to immediately 
regularize all GST compliance by paying the applicable penalty.