The Goods and Services Tax (GST) regime has specific penalties and interest charges to ensure businesses comply with the law. Non-compliance, like late filing, incorrect invoicing, or tax evasion, can lead to substantial penalties, ranging from late fees to significant fines and even legal consequences in fraud cases. If you’re a business owner in Bangalore, understanding these penalties and the interest rates for delayed payments can help you avoid hefty charges and ensure smooth business operations.
The GST Act outlines various offenses and corresponding penalties to ensure compliance. Offenses range from failure to register under GST, incorrect invoicing, tax evasion, and false information submission. These penalties are governed under Sections 122 to 128 of the Central Goods and Services Tax (CGST) Act.
Non-compliance with GST regulations can result in penalties, which vary based on the severity of the offense. Common penalties include:
Interest charges are imposed if GST payments are delayed. Currently, the interest rate stands at 18% per annum for late payments. For wrongful claims of input tax credit (ITC), the interest rate is higher at 24% per annum. Interest is calculated from the day after the due date until the payment date.
To calculate penalties and interest accurately, businesses can use the following formulas:
Using these formulas, businesses can easily estimate penalties and interest charges and take necessary steps to minimize financial losses.
Businesses can avoid penalties by adopting the following practices:
If penalties are imposed, businesses can appeal or rectify them through the following steps:
Understanding GST penalties and interest is crucial for maintaining compliance and avoiding financial setbacks. By proactively filing returns, maintaining accurate records, and adhering to tax regulations, businesses in Bangalore can safeguard themselves from hefty penalties and interest charges.
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Penalties for late filing include a fee of ₹100 per day under CGST and ₹100 under SGST, with a maximum cap of ₹5,000. There is no late fee for IGST
Interest on delayed GST payments is calculated at 18% per annum on the outstanding tax amount, starting from the day after the due date until the payment date.
Penalties can be waived in specific cases of minor breaches or if the taxpayer discloses the breach voluntarily.
Claiming wrongful ITC may result in a penalty and interest rate of 24% per annum on the amount wrongly claimed.
You can avoid penalties by filing returns on time, maintaining correct invoices, and complying with ITC rules. Consulting a GST expert for timely advice is also beneficial.