The efficient implementation of the indirect taxation law, known as GST, necessitates tough penalties for tax evaders. To encourage people to comply with the GST regime in India, the government has established three key strategies: interest, monetary penalties, recovery, and suspension of GSTIN. The penalties and prosecution when gst return is not filed are discussed in this blog.

What Is GST?

The Indian government passed the Goods and Service Tax Act on March 29, 2017, and it went into force on July 1, 2017. The Goods and Services Tax (GST) is a single domestic indirect tax law that applies across the country.

The Goods & Services Tax (GST) is a tax that applies to both goods and services. It is an indirect tax that has primarily replaced various other indirect taxes in India, such as VAT, Service tax, Excise duty, etc. This will make tax collection easier, reduce double taxation, and increase process efficiency.

Related Read: Your Self-Help Guide For GST Registration

What Is The Penalty For Late Filing Your GST Returns?

Fortunately, there is no penalty prescribed under the GST law for late or non-filing of GST returns. Instead of penalty, the GST registered dealer is subjected to Late fees for late filing of returns.

What Is The Applicable Amount Of Late Fees?

The following table details the late fees applicable to various returns under GST law. The late fees will increase every day until it hits the capping limit.

Further late fees need to be mandatorily be paid by debit to the Electronic cash ledger. Input tax credit (ITC) cannot be utilized for payment of late fees.

Return TypePAN India Turnover in Previous YearPer Day under CGST+SGST ActMaximum Amount under CGST+SGST Act

NIL Liability GSTR-1 / 3B 10 + 10 = Rs 20 250 + 250 = Rs 500
GSTR-1 / 3B Below 1.5 Crores 25 + 25 = Rs 50 1000 + 1000 = Rs 2000
Between 1.5 to 5 Crores 25 + 25 = Rs 50 2500 + 2500 = Rs 5000
Above 5 Crores 25 + 25= Rs 50 5000 + 5000 = Rs 10000
NIL Liability GSTR-4 Composition dealer Return 10 + 10 = Rs 20 250 + 250= Rs 500
GSTR-4 Composition dealer Return 25 + 25 = Rs 50 1000 + 1000 = Rs 2000
NIL Liability GSTR-5 10 + 10 = Rs 20 5000 + 5000 = Rs 10000
GSTR-5 25 + 25 = Rs 50 5000 + 5000 = Rs 10000
GSTR-6 ISD Return 25 + 25 = Rs 50 5000 + 5000 = Rs 10000
GSTR-7 TDS Return 25 + 25 = Rs 50 1000 + 1000 = Rs 2000
GSTR-9 Annual Return 100 + 100 = Rs 200 0.25% + 0.25% of Turnover

consequences of not filing GST Returns

What Are The Other Consequences Of Not Filing GSTR-1/3B?

Input tax credit denial to your customers

  • Your customer will be denied input tax credit of GST charged by you on your sales invoices.

Blocking of E-waybill

  • You will not be able to generate E-waybill if two consecutive GSTR 3B is not filed

Blocking of GSTR-1

  • You will not be able to file GSTR-1 if two consecutive GSTR 3B is not filed

Penalty for non-payment of GST

  • For certain specific offences, there are provisions of penalties in GST. One of such offences is not paying collected tax amount within 3 months from the due date. The Penalty will be equal to the amount of tax collected subjected to a minimum of Rs. 20,000

Suspension and then Cancellation of GSTIN

  • If you (a regular taxpayer) does not file a return for a continuous period of six months, then the GST Officer may cancel the GST registration of such person. Before cancellation, the officer will issue a Notice seeking your clarification. You are required to reply in 7 working days, giving reasons to the officer for not cancelling your GST registration. However, officers don’t need to initiate the cancellation immediately after the non-filing of the 6th consecutive months return. If officers choose to initiate the procedure of your GST Registration cancellation, then your GSTIN will be suspended. Until the suspension is revoked, you can not supply any Taxable Goods.

Recovery Proceedings under section 79

Related Read: E-Invoicing Under GST

What Are Recovery Proceedings Under Section 79?

If you do not file your GSTR 3B despite constant reminders and notices, the department will initiate the recovery proceedings. We have detailed the entire process for your understanding as follows:

  • First Reminder – 3 Days before Due Date to nudge taxpayer to file return on or before the due date
  • Second Reminder – Immediately after the due date to inform that return was not filled on the due date
  • Notice – 5 Days after Due date, notice in Form GSTR 3A, requiring the person to file returns in 15 Days
  • Order – Any time after the lapse of 15 Days of service of notice in form GSTR 3A, provided the return is not filled. Officer may proceed for assessment.
    Here the officer will compute the tax liability to the best of his/her judgment. The Officer may take into account the details of outward supply furnished by the person, inward supply is shown by his/her suppliers, e-waybill details, etc.
    Order will be issued in ASMT – 13, and a summary will be uploaded in Form DRC -07 by an officer.
  • Initiation of proceedings: After 30 Days of serving of order in form ASMT -13, the Officer may initiate the recovery proceeding under section 78 and actual recovery under section 79. In the GST regime, officers are empowered to recover the tax payable from your debtors, refund dues, seized Goods, Property etc.

It is worthy of mentioning that officers may proceed to do an assessment. The word “may” means that it is not binding on officers that they have to compute the tax payable exactly on the expiry of the 15th Day of serving the notice in GSTR 3A. Officers may proceed on any day after the completion of 15 days. Thus the exact timeline of initiation of recovery cannot be quantified.

What Are Consequences Of Delayed Filing Of GSTR-1/3B Apart From Late Fees?

The consequences are as follows:

  • If a taxpayer is required to pay tax within the prescribed time but fails to pay, interest @18 % will be levied for the delay in payment.
  • The interest will be payable only if you use the cash ledger balance to pay taxes. In other words, if you have enough input tax credit and you do not pay taxes using net banking/challan/balance already added in the cash ledger, then there won’t be any interest leviable on you.
  • There is no concept of maximum capping in case of interest.

Related Read: What Are The GST Compliances In E-Commerce?

Conclusion

In India, all GST registered dealers must file their GST returns on a monthly, quarterly, or annual basis, depending on the nature of the business. A GST return is a document that comprises the details of outward and inward supplies that a registered taxpayer must file with the Indian tax authorities. A late fee and interest are imposed on the taxpayer if the GST Return is not filed on time.

Related Read: Implications Of GST On Warranty On Sales

How Can We Help You?

At InCorp, our team has extensive expertise and experience that can assist you in complying with GST requirements and managing your taxes in a timely manner.

Our service scope includes:

  • GST Compliances
  • GST Operational Assistance
  • GST Audit Services
  • GST updates on recent notifications
  • GST Representation And Litigation Support
  • Other Indirect Taxes Advisory And Litigation
Stay compliant with all GST regulations!

Contact us today!