Explore the detailed breakdown of offences and penalties under the GST regime for FY 2025-26. Learn about specific penalties, recent updates, and how they affect businesses.
Recent Updates on Offences and Penalties under GST
Offences Under GST
Penalties under GST
Minor Breaches under GST
General Rules Regarding Penalty
FAQs on GST Offences and Penalties
Amendments in Section 122
Recent changes to Section 122 of the CGST Act affect electronic commerce operators.
Amendment effective from October 1, 2023.
Applies to e-commerce operators under Section 52.
Focuses on tax collection at source.
Introduction of Section 74A
Section 74A replaces Sections 73 and 74 for certain offences.
Pending notification by CBIC.
Aims to streamline penalty procedures.
Expected to simplify compliance.
Fake or Wrong Invoices
Issuing false invoices is a major offence under GST.
Supplying goods/services without an invoice.
Issuing invoices without actual supply.
Using another person's GSTIN.
Fraudulent Activities
Fraud under GST involves deliberate misinformation.
Submitting false information.
Filing fake returns to evade tax.
Providing false records during proceedings.
Tax Evasion Tactics
Avoiding tax payments through illegal means.
Not submitting collected GST within 3 months.
Fraudulent refund claims.
Utilizing ITC without receipt of goods/services.
Supply/Transport Violations
Improper handling of goods during supply or transport.
Transporting goods without documents.
Supplying goods meant for confiscation.
Tampering with seized goods.
Common Offences and Penalties
Penalties for common GST offences are stringent.
100% penalty for fraud cases (minimum ₹10,000).
Penalty equals tax evaded for fake invoicing.
Interest may apply even without penalties.
Penalties in Fraud Cases
Severe penalties for fraudulent activities.
100% of tax evaded or ITC availed.
Minimum penalty of ₹10,000.
Includes imprisonment for severe cases.
Penalties for Assisting Fraud
Penalties also apply to those aiding fraud.
Liability extends to accomplices.
Includes financial penalties.
Potential for legal prosecution.
General Penalty Provisions
General penalties apply for unspecified offences.
Covers breaches not specifically mentioned.
Penalty up to ₹25,000.
Applies to minor compliance failures.
Definition of Minor Breaches
Minor breaches involve small-scale non-compliance.
Errors in documentation.
Late filing of returns.
Minor discrepancies in tax payments.
Penalties for Minor Breaches
Penalties are generally lower for minor breaches.
Fines up to ₹5,000.
Interest on late payments.
Warnings for first-time offences.
Principles of Penalty Imposition
Penalties are imposed based on certain principles.
Proportional to the offence.
Consideration of intent.
Opportunity for rectification.
Appeal Process for Penalties
Taxpayers can appeal against penalties.
Filing an appeal within 30 days.
Submission of Form GST APL-01.
Hearing before the appellate authority.
What is the penalty for issuing fake invoices under GST?
The penalty for issuing fake invoices is 100% of the tax evaded or ITC availed, with a minimum of ₹10,000. This applies to both the issuer and any accomplices.
Are there any jail terms for GST offences?
Yes, serious offences involving fraud or tax evasion can lead to imprisonment. The term can range from 1 year to 5 years, depending on the amount involved.
How can I appeal against a GST penalty?
To appeal a GST penalty, file Form GST APL-01 within 30 days of the penalty order. The appeal will be heard by the appellate authority.
What constitutes a minor breach under GST?
Minor breaches include small errors in documentation, late filing of returns, and minor discrepancies in tax payments. Penalties are generally lower for such breaches.
Is there a penalty for late GST payments?
Yes, late GST payments attract interest at 18% per annum. Additionally, a penalty may be imposed based on the delay duration.
What is the penalty for not registering under GST?
Failure to register under GST when required can result in a penalty of 100% of the tax due or ₹10,000, whichever is higher.
Can penalties be waived for first-time offences?
In some cases, warnings may be issued for first-time minor offences, but this is at the discretion of the tax authorities.
How is the penalty calculated for tax evasion?
The penalty for tax evasion is 100% of the tax evaded. For example, if ₹50,000 is evaded, the penalty will also be ₹50,000.
Are penalties different under the old and new GST regimes?
Penalties are generally consistent across regimes, but specific provisions may vary. It's important to review the applicable rules for each regime.
What happens if I assist someone in committing GST fraud?
Assisting in GST fraud can result in penalties similar to those for the primary offender, including financial penalties and potential legal action.