Books

Penalties in GST

Last updated on 27 September, 2017

 Back to Guides

Penalties in GST

The introduction of the GST regime has brought India simplified tax filing, greater transparency, and less potential for tax evasion. Since the tax return filing process has been moved online, business owners now have to upload invoices and other documents as proof of transactions. To ensure that business owners are complying with the rules and regulations, the Government has created a list of non-compliant activities that are likely to invoke penalties. Let’s look at the various offenses and their consequences:

1. Carrying out fraudulent activities

Consequence:

The offender will be fined Rs. 10,000 or the equivalent tax amount evaded. Furnishing false information will lead to a fine of Rs. 10,000 for the first offense, and continued offense will lead to fines of Rs. 100 per day, up to a maximum of Rs. 25,000. Any person who helps the offender will be fined Rs. 25,000.  

2. Delayed filing of returns

Consequence:

The offender will be fined Rs. 100 per day, up to a maximum of Rs. 5,000. If the taxpayer fails to furnish GSTR9, they will be fined Rs. 100 per day, up to a quarter of their turnover within the state in question.  

3. Not issuing accurate invoices

Consequence:

The offender will be fined of Rs. 10,000 or the equivalent tax amount evaded.  

4. Supplying goods and services in contravention to GST laws

Consequence:

If the offender chooses to come forward voluntarily, they will be fined an amount equivalent to the tax evaded. Otherwise, they will be fined 50% of the value of the supply.  

5. Evading taxes on purpose

Consequence:   The offender will pay a fine of Rs. 10,000 or the equivalent tax amount evaded.

6. Participating in activities that involve tampering/obstruction

Consequence:

These activities are judged very seriously. Offenders will be subjected to 6 months of imprisonment, plus a fine of an undisclosed amount.

7. Repeatedly making short payments

When the payment made is lesser than the legal requirement, it’s called short payment. A taxpayer is said to have made ‘repeated short payments’ if they were involved in 3 short payments in 3 returns during 6 consecutive tax periods.

Consequence: 

If a taxpayer is involved in this offense, they will be fined an amount of Rs. 10,000 or 10% of the short tax paid (whichever amount is higher).

Any other breach of law:

Common penalty:

Any offense under GST for which a penalty is not specified will be fined an amount up to Rs. 25,000. In case, the taxpayer is convicted for fraudulent activities, then apart from the above penalties, the following will apply:

What happens after a penalty is imposed on the taxpayer?

In the GST regime, taxpayers will not be penalized for minor offenses, if:



       
Thank you for your feedback!

Get your business ready for GST with Zoho Books.

LEARN MORE