Understanding the penalty consequences of common compliance failures helps businesses prioritise their compliance efforts. This article presents 10 common scenarios and the penalties that apply.
Scenario 1: Late Filing of GSTR-3B
- Penalty: Late fee under Section 47 at ₹50 per day (₹20 per day for nil returns), subject to caps.
- Interest: 18% per annum on the net tax liability.
Scenario 2: Non-Filing of GSTR-1
- Penalty: Late fee under Section 47.
- Consequence: Blocking of GSTR-1 filing for subsequent periods and potential suspension of registration.
Scenario 3: ITC Claim Exceeding GSTR-2B
- Penalty: 100% of the excess ITC or ₹10,000 under Section 122(1)(vii).
- Interest: 18% on the excess ITC utilised.
Scenario 4: Failure to Pay RCM
- Penalty: 100% of the tax or ₹10,000 under Section 122.
- Interest: 18% per annum from the due date.
Scenario 5: Non-Generation of E-Way Bill
- Penalty: Under Section 129 for detention or Section 130 for confiscation.
- Amount: 200% of tax (Section 129) or fine equal to tax (Section 130).
Scenario 6: Goods Sent for Job Work Not Returned
- Penalty: Deemed supply under Section 143 — GST payable on the value of goods.
- Interest: 18% from the original dispatch date.
Scenario 7: TCS Not Deposited by E-Commerce Operator
- Penalty: 100% of the TCS or ₹10,000 under Section 122.
- Interest: 18% per annum.
Scenario 8: Wrong Place of Supply
- Penalty: Tax demand with interest and penalty under Sections 73 or 74.
- Amount: Tax short-paid plus interest and penalty.
Scenario 9: Failure to File GSTR-9
- Penalty: Late fee under Section 47 and general penalty under Section 125.
- Amount: ₹200 per day.
Scenario 10: Fake Invoice Issuance
- Penalty: 100% of tax or ₹10,000 under Section 122(1)(ii).
- Prosecution: Under Section 132 with imprisonment up to 5 years.
Conclusion
The penalty consequences of common compliance failures can be significant. Businesses should prioritise compliance in high-risk areas such as ITC claims, RCM payments, and e-way bill generation.
At Anuj Desai & Associates, we provide expert advisory services on GST compliance and penalty defence. Our team can help you identify and address compliance gaps.
For a confidential consultation, contact us at office@anujdesaiassociates.com or call 9619456656. Visit our website at https://anujdesaiassociates.com or connect with our founder on LinkedIn at linkedin.com/in/ca-anuj-desai-122547230.