An advance ruling helps the applicant to plan his activities in cases where he is liable to pay GST in advance. It brings certainty in determining tax liability as the...
For laws to be effective, strict actions against the law breakers needs to be taken. With this objective, our Indian government has introduced penalties provisions under GST laws for the GST offenders. After GST registration, one can be liable to following kinds of penalties. In this article we will discuss GST Registration and What are Its Penalties.
- Interest penalty
- Monetary penalty
- Prosecution of the offender.
Under the GST Act, there are few kinds of offenses listed under the section 122 (1) that are subject to a penalty of Rs10,000/- or the amount of tax involved or whichever is greater.
Following are a few offenses listed.
- Wrong or fake invoices.
- Fraud way of obtaining a refund.
- Evasion of tax
- Transporting goods without proper documents
- Unregistered under the GST registration online which is required by the law.
- A taxpayer, that is not eligible for obtaining a composition scheme.
- Giving incorrect information on their sales to reduce or evade tax.
Late payment or not paying of GST will result in penalties under the GST.
The interest must be paid by every taxpayer that pays GST after a due date, 18% per annum.
The claim of excessive input tax credit is penalized @ 24% per annum.
Or reduces excess output for the tax liability of 24% per annum.
Late filing will land you in a penalty called the late fee. If a person doesn’t pay return within the timeline then the GST penalty would be Rs 50/- per day for normal return and Rs 20/- per day in case of no return.
Composition scheme:- If a noneligible person registers under composition scheme then that person has committed fraud and the applicable penalty shall be 10% of the tax due, it could be up to Rs 10,000/- whichever will be higher
Any sort of wrongful GST rate:-if any person charges higher than applicable GST yet also not giving the payable tax then penalty is 100% of the tax due or Rs 10,000/-
Not issuing an invoice or giving wrong the invoice: –the penalty is 100% of due tax or Rs 10,000/- whichever will be higher. However, if the person fails to issue an invoice containing certain details that are misleading and fraud or hidden, the penalty shall be Rs 25,000/-
In certain cases where the tax amount is over Rs 100 lakhs and up to Rs. 200 lakh, the offender will land in jail for up to a year.
If the tax amount is over Rs 200 lakh and up to Rs 500 lakhs and for this rate, the punishment would be up to 3 years in jail time.
If the tax rate exceeds Rs 500 lakhs the jail time would be up to 5 years.
General penalties:- in any case where the penalty can’t be specified, it’s straight Rs 25,000/-
What is the Prosecution of the Offender
This means conduction of legal proceedings that are against somebody with respect to a criminal charge. A person with the deliberate intention of committing the fraud will be liable to prosecution under the GST act. For example, it could be described as issuing a certain invoice without the supply of the goods or any services. Or in the case where the consumer asks for unlawful refund by fraud submitting wrong financial records. For such cases, there are penalty provisions under GST.