GST Penalty for Non-Filing

Goods and Services Tax (GST) is one of the broad forms of indirect taxes adopted in India to simplify the Indian taxation procedure. All the registered taxpayers under GST would be periodically obligated to file returns. The penalty and consequences may be severe in the event that it is not done. This article examines GST penalty on non-filing, penalties on late filing, provisions on interest and legal implications as well as how to avoid GST penalties.

What is GST Return Filing?

GST return Filing is an obligatory step that GST registered companies must go through. GSTR-1, GSTR-3B, GSTR-4 and GSTR-9 returns have to be sent monthly, quarterly or annually depending on the type of taxpayer.

Penalties for Non-Filing of GST Returns

• Late Fee on delayed filing of GST Returns

When the GST returns are not filed within the required time, a late fee charge would be applied under Section 47 of the CGST Act, 2017.

Applicable Late Fee:

• GSTR-3B & GSTR-1:

1. 50 per diem ( 25 CGST 25 SGST )
2. NIL returns ( 20/day (10 CGST+10 SGST)

Maximum Cap:

1. ₹5,000 per return

• Interest on Late Payment of Tax

Should tax remain unpaid as and when it should be, then interest to the tune of 18 percent per annum is imposed against the amount of tax which was due. The computation is done between the following date of due date and the day the payment is actually paid.

Consequences of Continued Non-Filing

In case of non-filing of returns over a long duration, the outcomes could be:

• Blocking of E-Way Bill Generation

1. Taxpayers, who fail to keep filing GSTR-3B within 2 forms in a row, will not be able to issue e-way bills, which has an impact on their operations and moving goods.

• Suspension and Cancellation of GST Registration

1. Failure to remit in several periods may result in automatic revocation of the GST registration by the tax collectors.

• Assessment by Tax Authorities

1. The department can get a best judgment assessment in Section 62 of the CGST act where the officer estimates how much tax is to be paid on the returns received.

• Prosecution and Penalty

Where the fraud or the deliberate avoidance is really bad, especially taxpayers can get:

1. Monetary penalty

2. Punishment by the GST act

3. Incarceration (in exceptional and severe crimes)

Relief Measures and Amnesty Schemes

Occasionally, the government will have amnesty programs where it waives late fees and penalties of unfiled returns.

How to Avoid Penalties?

• Complete filing returns within due time, even when there are no transactions in business (File NIL returns)

• Keep adequate documentation and reconciliations on the data on a regular basis

• Be compliant by using accounting programs or consult the GST professionals in time.

• Follow government alerts and deals on penalties waivers

Conclusion

The economic and legal ramifications can be dramatic in case of a failure to submit the GST returns. Businesses are advised to be on business compliance in time to prevent any penalty, prevent being ranked poorly as regards business compliance and stay on business without any hindrance. Whenever you have delays, you should act fast to file pending returns and pay dues.

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