GST non-compliance and consequences is know a topic discussed widely, therefore creating confusion amongst the tax payers. Under the GST law, there are some compliance that are required to be mandatory followed by the traders. But as these compliance are not followed strictly, so the taxpayers are becoming defaulter at an earlier or later stage.

Common non-compliance areas:

Here are some of the common and major non-compliance areas and their consequences:

  • Incorrect information:

A taxpayer will have to pay penalty if he furnishes false or wrong information at the time of resignation or proceedings. A user should therefore be sure that the information in the document is attached and are valid.

  • Non-filing of GST returns:

If the person fails to file either GSTR-3B or GSTR-1, then the following penalty will be applicable:

  • A late fee of Rs. 20 per day in case of nil return,
  • 50 per day in case of other returns.

However, the above amount is subjected to a maximum amount of Rs. 10,000.

  • Non-issuance of E-way bill:

It is mandatory for a person registered under GST to generate an e-way bill whenever goods are sent inter-states. Failure to issue an e-way bill may attract penalty and lead to detention, seizure or release of goods in transit.

  • Nil return:

If a nil return is filed by a non-eligible person, then the GST number of such person will be cancelled. This cancellation will take place along with the amount of penalty levied by the GST department.

  • Wrong address of business premises:

Currently, the GST number is allotted to an assessee on the basis of the information provided in the Registration form. But the physical verification of the premises is not done before allotment of the GST number. So, the option is being misused by the assessees. Also, no amendment is made in the GST records if the address of the premise is changed. In such a case, the department will first issue a show cause notice to the dealer. If the department is not satisfied with the reply, then the GST registration of the assessee will be cancelled. The penalty is also required to be paid in such a case.

  • Stock Register and Sale/ Purchase Invoice: 

Sometimes, it is quite possible that a dealer is not maintaining the stock register and sales or purchase invoice. This will be considered as a penal offence under the Goods and Service Tax law thereby attracting a penalty.

  • Evasion of tax:

The penalty under section 122 will also be attracted if:

  • Tax is collected by a person but it is not credit to the Government within a period of 3 months.
  • Tax is collected by any means of fraud.
  • Mis-utilization of ITC and suppression of tax is found.

Amount of penalty:

In all the above cases, the amount of penalty levied will be higher of the following amounts:

  • The actual amount of tax or Input Tax Credit due from the defaulter,
  • Or Rs. 10,000.

Thus, a person registered under GST must take care of such aspects to avoid any penalty, interest or fine.

 
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An MBA in finance, I like to cover the wide range of topics related to Taxation, SEBI, Finance and anything that is Public Helpful. The motive is always to make it simpler for the taxpayers understand the system better and take informed decisions.

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