GST law prescribes penalties for non-compliance ranging from late filing fees (₹50/day) to imprisonment (up to 5 years). This guide covers all penalty categories: late filing, interest rates, offences under Section 122, and compounding provisions.
| Section | Offence | Penalty |
|---|---|---|
| Section 122(1) | Supplies without invoice or with false invoice | ₹10,000 or tax amount — whichever is higher |
| Section 122(1) | Collects GST but fails to deposit within 3 months | ₹10,000 or tax amount — whichever is higher |
| Section 122(1) | Collects GST in contravention of GST Act | ₹10,000 or tax amount — whichever is higher |
| Section 122(1) | Takes or distributes ITC without actual receipt of goods/services | ₹10,000 or tax amount — whichever is higher |
| Section 122(1) | Falsifies or substitutes financial records or produces fake accounts | ₹10,000 or tax amount — whichever is higher |
| Section 122(1) | Obstructs or prevents any officer from discharging duties | ₹10,000 or tax amount — whichever is higher |
| Section 122(1) | Suppresses turnover leading to tax evasion | ₹10,000 or tax amount — whichever is higher |
| Section 122(1) | Fails to register despite being liable | ₹10,000 or tax amount — whichever is higher |
| Section 122(2) | Aids or abets any of the above offences | Up to ₹25,000 |
On the amount of tax remaining unpaid, from due date to date of payment
On the ITC amount wrongly claimed and utilized, from the date of utilization
On the refund amount, if not processed within 60 days of application
For offences under Section 122: ₹10,000 or the amount of tax involved, whichever is HIGHER. For late filing: maximum ₹10,000 per return (₹5,000 CGST + ₹5,000 SGST) for GSTR-1/3B. For GSTR-9: 0.04% of turnover. For prosecution offences (Section 132): imprisonment up to 5 years + fine. There is no upper limit on interest — 18%/24% accrues until full payment.
Yes. Late filing attracts: (1) Late fee: ₹50/day (₹25 CGST + ₹25 SGST) for GSTR-1/3B, capped at ₹10,000 per return. Nil returns: ₹20/day. (2) Interest at 18% on tax liability from due date. (3) If returns not filed for 6+ consecutive months, registration may be cancelled by the officer. (4) Input tax credit to your buyers is blocked if you don't file GSTR-1.
18% per annum on tax not paid by due date (Section 50(1)). 24% per annum on wrongly claimed and utilized ITC (Section 50(3)). Interest is calculated on a daily basis from the date the tax was due until the date of actual payment. Note: Interest on ITC was earlier on gross ITC claimed, but amended to only on ITC claimed AND utilized.
Partial relief is available: (1) Under Section 73: No penalty if tax + interest paid within 30 days of SCN. (2) Under Section 74: Penalty reduced to 15% if paid within 30 days of SCN, or 25% if paid within 30 days of order. (3) GST Amnesty Schemes are periodically announced by the GST Council (e.g., reduction in late fees for past-due returns). (4) Complete waiver is rare and only through specific government notifications.
Section 138 allows compounding (settling the offence by paying a sum instead of prosecution) for most offences EXCEPT: (1) Offences where tax evasion exceeds ₹5 crore, (2) Habitual offender (convicted earlier under GST), (3) Offences related to supplies without invoice (exceeding ₹1 crore). Compounding amount: minimum 25% of tax, maximum 100% of tax involved.
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