Penalties Under GST Act- Why One Nation One Tax?

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 one nation one tax and Penalties Under GST Act.

• Interest penalty
• Monetary penalty
• Prosecution of the offender.

Under the GST Act[1] , 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.

Types of GST offenses

• Wrong or fake invoices.
• Fraud way of obtaining a refund.
• Evasion of tax
• Transporting goods without proper documents
• Unregistered under the Online GST registration 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.

Interest penalty Under GST

• 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 due date, 18% per annum.
• The claim of the excessive input tax credit is penalized @ 24% per annum.
• Or reduces excess output for the tax liability of 24% per annum.

Monetary Penalty Under GST

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 non eligible 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/-

Corporal Punishments

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/-

Prosecution of the Offender Under GST

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.