Strict action must be taken against tax offenders in order for the new indirect taxation system, known as GST, to be implemented successfully. Three crucial strategies—prosecution, interest, and monetary penalties—have been developed by the state of India to encourage compliance with the country’s new general sales tax regime. In this blog, we’ll talk about the fines and prosecutions that the Central Goods and Services Tax Act of 2017 provides for Non-Filing of GST Returns in India.

Any registered person who fails to submit their annual return is sent a notification in the form GSTR-3A under Section 46 of the CGST Act of 2017 requesting that they do so within 15 days. Additionally, Section 62 imposes penalties on registered individuals who fail to submit an annual return for not filing their GST Taxes.

Establish rules for Non-Filing GST Returns

The CGST Act’s regulations include the following:

• The enrolled taxpayer will receive an automated message three days prior to the GST return’s due date.
• Soon after the GST return filing deadline, the defaulter will get both an automated notice and a letter.
• Within five days of submitting the return to the registered person, a notice in the Form GSTR 3A will be received.

Following the expiration of the 15-day notification period, the prescribed authority will proceed to determine the tax liability by considering all pertinent data and will then issue an order in the required format. The summary must be uploaded by the authority in the designated Form.

Late filing of GST Returns

In the event that a violation of the GST Act occurs, the CGST Act, 2017’s specified penalty must be paid. A fee known as a late fee may be assessed for filing taxes late. According to the statute, this cost may not exceed $100 per day. It will cost Rs. 200 per day in total (100 from the state GST and 100 from the central GST). The maximum fine is set at Rs. 5000. However, there is no IGST late fee associated with the matter of delayed filing.

The total amount of interest that must be paid, in addition to late fines, is 18% annually. The taxpayer must take it into account when determining how much tax to pay. The time frame will begin on the day after filing and ends on the day of payment.

Penalties

Subsequent returns cannot be filed if a person fails to submit any GST returns to the required authority. For instance, the subsequent returns GSTR-3 and future returns cannot be filled if the general sales tax report -2 has not been submitted to the authorities. Therefore, failure to submit a GST return has a domino effect that may result in higher fines and penalties.

Penalties and imprisonment for Non-Filing GST Return

The following situations will lead to a fine and/or imprisonment:

• Damaging or tampering with any papers or evidence, or interfering with the performance of any officer’s responsibilities 6 months in prison and a fine.
• False information provided in violation of the Act results in a six-month jail sentence and a fine.
• Where the Input Tax Credit was inadvertently claimed for an amount greater than Rs. 50 lakhs but less than INR 1 crore, or when tax evasion occurred, the penalty is imprisonment, which can last up to a year, and a fine.
• If an input tax credit was mistakenly claimed for an amount greater than INR 1 crore but less than INR 2.5 crores, the penalty is non-bailable imprisonment, which can be extended up to 3 years, and a fine.
• Non-bailable detention can be extended for a further five years with a fine in cases where the Input Tax Credit was improperly claimed on an amount greater than INR 2.5 crores.

Conveyance or Goods Confiscation for Non-Filing of GST Returns

The punishment stipulated seizing items or a vehicle and levying a fine of INR 10,000 or a sum equal to the tax that was evaded. The following offenses carry the penalty:

• If a person fails to keep track of the products for which he is responsible for paying taxes.
• If someone supplies or gets items while breaking any rule with the intention of avoiding paying taxes.
• If a person sells any items subject to tax without being registered.
• If someone violates any regulation or requirement by using transportation to move taxable goods.

Other penalties for Non-Filing GST Return

Offenses for which a penalty for Non-Filing GST Return will be assessed are as follows:

1. If a person commits one of the following stated offenses, a fine of INR 10,000 or a sum equal to the tax evaded will be imposed.

• without supplying the associated products and services, issues an invoice.
• Tax collection, in the event that taxes are not paid to the authority within three months of the date on which the payment became due.
• An online retailer either doesn’t collect taxes or doesn’t pay them to the government.
• Takes ITC without fully or partially receiving the goods and services^[1]
• Obtain a tax refund through fraud;
• Falsify or replace financial records, produce fictitious accounts and paperwork, or submit false tax returns;
• Doesn’t manage to register;
• Provides bogus registration-related information;
• Move taxed commodities without any paperwork;
• Failure to maintain accounting records;
• Limit turnover that leads to tax avoidance;
• Uses a different person’s identity to issue an invoice or paperwork.

2. A fine of up to INR 25,000 may be levied if any individual helps or supports any of the above-mentioned offenses;

3. A fine of up to INR 25,000 may be levied if a person is found guilty of an offense for which there is no legal punishment.

Conclusion 

Non-Filing of GST Returns in India results in various penalties, late fees, imprisonments, goods confiscation, etc. Thus depending on the type of business, every registered business must submit monthly, quarterly, or annual GST returns. A return is a written statement of income that must be submitted to India’s tax administration authorities by a taxpayer. Contact Bizadvisors.io to learn more about the GST Return Filing Process.

Read our article:A Complete Guide on GST Return Filing Procedure in India