Goods and Services Tax (GST) has become a crucial component of India's tax landscape since its introduction. However, with the complexities involved, businesses often find it challenging to navigate the GST framework seamlessly. One critical aspect that businesses need to be aware of is the imposition of penalties for non-compliance with GST regulations. 

GST Late Fee & Penalty

Late filing or non-compliance with GST regulations can attract penalties in the form of late fees and penalties. These penalties are imposed to ensure that businesses adhere to the timelines and requirements specified under GST law.

Late Fees

Late fees are charges levied for delayed filing of GST returns. The amount of late fee is typically specified on a per-day basis, and it varies based on factors such as the type of return and the taxpayer's turnover.

Also Read:- How to file GST returns online?

Penalties

Penalties, on the other hand, are imposed for serious non-compliance with GST regulations. These can include issues such as fraudulent activities, tax evasion, and wilful disregard of GST rules.

Late fees are levied on taxpayers who fail to file GST returns by the due date. The late fee is calculated as follows:

• For returns with tax liability: ₹50 per day for each delay, with a maximum of ₹10,000 per return.
• For nil returns: ₹20 per day for each delay, with a maximum of ₹1,000 per return.
• In addition to late fees, interest is charged on late payment of GST at the rate of 18% per annum from the due date until the date of payment.

GST Penalties waiver

The GST Act provides provisions for waiving penalties in certain circumstances. The Commissioner may waive penalties if the taxpayer satisfies the following conditions:

• The taxpayer has a clean track record of tax compliance.
• The delay in filing the return or payment of tax was due to genuine reasons beyond the taxpayer's control.
• The taxpayer has filed the return or made the payment within a reasonable time after the genuine reasons ceased to exist.

GST Penalties under section 74

Section 74 of the GST Act empowers the Commissioner to impose penalties for various offences, including:

• Suppressing facts or furnishing false information in any return, statement, or document.
• Obstruction of any officer in the discharge of his duties.
• Non-compliance with any summons, requisition, or order issued by the Commissioner.
• The penalties under Section 74 can range from ₹250 to ₹50,000, depending on the severity of the offence.

GST Penalties calculator

Several online GST penalties calculators are available to help taxpayers estimate the late fees and interest they may be liable for. These GST calculators typically require the taxpayer to enter the due date of the return, the date of filing, and the tax liability.

You can also use the online GST penalty Calculator by following the given steps:

• Return type: GSTR-3B, GSTR-9, or GSTR-9A
• State: The state in which your business is registered
• Turnover category: Your business's turnover for the previous financial year
• Due date: The due date for filing the return
• Date of filing: The date on which you filed the return
• Tax liability: The amount of tax you are liable to pay

Once you have entered this information, the calculator will estimate the late fees and interest you may be liable for. Please note that these are only estimates, and the actual amount you may be liable for may vary depending on the specific circumstances of your case.

GST Penalties per day

The late fee for delayed filing of GST returns is calculated on a per-day basis. For returns with tax liability, the late fee is ₹50 per day, while for nil returns, it is ₹20 per day.

GST Penalties rules

The Goods and Services Tax (Penalties) Rules, 2017, are a set of rules framed by the Central Government to specify the procedures and manner of imposing penalties under the GST Act. These rules provide detailed guidelines on various aspects of GST penalties, including:

Types of offences: The rules define various offences that can attract penalties under the GST Act, such as late filing of returns, suppression of facts, and obstruction of officers.

Assessment of penalties: The rules specify the procedure for assessing penalties, including the issuance of show-cause notices and the consideration of mitigating factors.

Payment of penalties: The rules outline the methods for paying penalties, including online payment through the GST portal and payment by challan at designated banks.

Waiver of penalties: The rules provide for the waiver of penalties in certain circumstances, such as genuine reasons for delay in compliance.

GST Penalties section

The provisions relating to GST penalties are primarily contained in Section 73 and Section 74 of the GST Act.

GST Penalties payment

GST penalties can be paid online through the GST portal or by challan at designated banks.

Online Payment:

• Log in to the GST portal using your credentials.

Go to the 'Services' tab and select 'Payment'.

• Click on 'Create Challan' and select 'Penalty' from the dropdown menu.
• Enter the required details, such as the type of penalty, tax period, and amount payable.
• Select the mode of payment as 'Net Banking' or ' Debit Card/Credit Card'.
• Make the payment and confirm the transaction.

Payment by Challan:

• Download the challan form from the GST portal.
• Fill in the required details, such as the GSTIN, tax period, type of penalty, and amount payable.
• Take the challan form to a designated bank and make the payment.
• Obtain a receipt from the bank and keep it for your records.

GST Penalties for late filing

GST Penalties for late filing are imposed on taxpayers who fail to file their GST returns by the due date. The late fee is calculated on a per-day basis and increases with the number of days of delay.

Also Read: GSTR-3B Guide: Return Filing, Format, Revision and Due Dates

Late Fee for GSTR-3B:

• ₹50 per day for each day of delay
• Maximum penalty of ₹10,000 per return

Late Fee for GSTR-1:

• ₹20 per day for each day of delay
• Maximum penalty of ₹1,000 per return

Late Fee for GSTR-9:

• ₹100 per day for each day of delay
• Maximum penalty of ₹5,000 per return

Interest:

Interest is charged on late payment of GST at the rate of 18% per annum from the due date until the date of payment.

GST Penalties waiver letter sample

In cases where a waiver is sought, a well-drafted letter can make a difference. A sample GST penalties waiver letter may include details such as the reason for the delay, steps taken for rectification, and a commitment to future compliance.

Seeking professional assistance for drafting a GST penalties waiver letter is advisable to ensure that it aligns with legal requirements and presents a compelling case for waiver.