Under the GST regime, one issue that has been persistent ever since the introduction of GST in 2017 is the inconsistency in GST Return filings by a registered taxpayer. In order to simplify and organise Indian Taxation System, a host of prerequisites for return filings have been laid by the CBIC , and any delay and/or error in the same can result in late fees and penalties, and even cancellation of GST Registration.
Penal Provision under GST
A registered taxpayer under GST can be liable to following offences and penalties for non-compliance to GST regulations:
Late Fees: In case of delay in filing GST returns, late fees or an overdue fine is applicable to the registered taxpayer.
The late fees applicable for all the forms except GSTR 9 are as follows:
Inter-state supply:
| Name of the Act | Late fees per day |
| CGST Act, 2017 | Rs 100 |
| SGST Act/ UTGST Act, 2017 | Rs 100 |
| Total | Rs 200 |
P.S: Under each act, the late fees applicable has been limited to Rs 5000.
As a relief measure, the following reduced rates of late fees are applicable for a temporary period:
| Name of the Act | Reduced late fees per day |
| CGST Act, 2017 | Rs 25 |
| SGST Act/ UTGST Act, 2017 | Rs 25 |
| Total | Rs 50 |
Intra-State Supply
As per the IGST Act, for inter-state supplies, the late fee is approximately equal to the sum of fees prescribed under both CGST and SGST Act
| Name of the Act | late fees per day |
| IGST Act, 2017 | Rs 200 |
Reduced late fee
| Name of the Act | Reduced late fees per day |
| IGST Act | Rs 50 |
Nil-Return Supply
| Name of the Act | late fees per day |
| CGST Act, 2017 | Rs 50 |
| SGST Act/ UTGST Act, 2017 | Rs 50 |
| IGST Act | Rs 100 |
Reduced Late fees
| Name of the Act | Reduced late fees per day |
| CGST Act | Rs 10 |
| SGST Act/ UTGST Act | Rs 10 |
| IGST Act | Rs 20 |
Late fees applicable for Annual Return form GSTR 9
| Name of the Act | late fees per day |
| CGST Act | Rs 100 |
| SGST Act/ UTGST Act | Rs 100 |
| IGST Act | Rs 200 |
As per GST law, the total amount of late fees applicable for Annual Return form GSTR 9 cannot exceed 0.25% of annual turnover in the given financial year.
Interest: Along with the late fees, a non-compliant taxpayer is also liable to pay interest under the following conditions
- Delayed payment of GST
- Excessive ITC claim
- Reduced excess Output Tax Liability
The interest rate applicable are as follows
| Non Compliance | Interest Applicable |
| Delayed GST Payment | 18% p.a. |
| Excessive ITC claim | 24% p.a. |
| Reduced excess Output Tax Liability | 24% p.a. |
The Interest has to be calculated from the next day on which tax was due.
Cancellation of Registration: The registration of the taxpayer can be cancelled under the following circumstances:
- 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, willful misstatement or suppression of facts.
Confiscation of Goods and/or Conveyance
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 the 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.
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