Impact of GST (Goods and Services Tax) Non-compliance
In the GST tax regime, there are two types of returns filing- periodic and annual returns. The periodic returns consist of monthly and quarterly returns that are filed for the transactions made during the month or quarter. On the other hand, the annual returns consist of a summary of the periodic returns filed during the financial year. Also, the annual returns considered as one of the most important returns as it is the last return to file at the end of the year.
Who is Liable to File an Annual Return?
All the taxpayers fall in the category responsible for filing an annual return. However, those taxpayers who get registration as given below examples are considered as exceptions. “Casual taxable persons” or “Non-resident taxable persons” such as exhibitors ‘Input service distributors’ who distribute the Input tax credit of the services invoiced in one location and to be used in different states.’
A person who tax is deducted at source, as the government did not implement any provision for the deduction of tax at source.
What are the Different Forms for Filing GST Returns?
Under the GST tax regime, a series of forms are prescribed for different categories of taxpayers. The list given below will make you aware of the category of the taxpayers and forms associated with them:
- Category of the taxpayer Return (GSTR) form
- Composition of the Scheme Registered 9A
- E-Com operator deducting tax 9B
- Others where turnover (for all states put together) exceeds INR 2 Crore 9C
- Others where turnover is less than INR 2 Crore 9
Lately, the filings of the forms such as GSTR 2 and GSTR 3 have been suspended by the government and a more simplified summary to file return GSTR 3B Form introduced. However, for the annual return, the government did not finalize the content yet as their efforts are to provide format with higher simplicity and comprehensiveness.
During the last council meeting, the recent format was expected to be taken up for discussion however, no action has been taken then by the committee. If the format is approved by the committee then the same will be put forward for the stakeholder consultation.
Effect of Non-payment:
As the last date for GST annual return filing approaches rapidly, the Tirupati GST Commissionerate has warned the public about the consequences of non-payment. If the taxpayer fails to file an annual return, he will be liable to pay a late fee of INR 200 per day during the period of failure, else it would attract a maximum of 0.25% of the said financial year’s turnover.
If no GST return is filed by the taxpayer, then he won't be able to file subsequent returns as well. The late filing of GST return will have a cascading effect that will translate into heavy fines and penalties.
The GST allows the late filing of returns. However, it attracts penalties for late filing known as a late fee. The late fee imposed on the taxpayer is INR 100 per day. It is INR 100 under CGST and INR 100 under SGST, evaluates INR 200 per day. The maximum penalty for the late filing of returns is INR 5000 per day. In the case of IGST, there is no late fee for any delay in filing.
For the late filing, the taxpayer required to pay not only the late fee but also the interest at the rate of 18% per annum, calculated on the tax to be paid. The time period for the calculation of interest will be from the next day of filing to the date of payment.
Under GST law, the non-compliance attract penalties and imprisonment. To avoid tax evasion there are some stringent actions instructed for the offenders. Among these actions the taxpayer either has to pay a penalty or the goods will be seized or both.
Here are Some Offenses Listed Below:
Failing to account for goods, for which the taxpayer remains liable to pay tax Sending or receiving goods by breaking rules to avoid tax. Availing goods/services which are not registered and taxable. Using a medium to transport and delivering taxable goods by breaking the rules.
Duration of Imprisonment
The duration of imprisonment depends on the type of offenses and the amount of tax evaded. If any offense committed for tax evasion of amount exceeds INR 500 lakhs, the convict will be liable for three years of imprisonment including fine and is non-bailable.
If committed offense exceeds INR 200 lakhs, for tax evasion, then the duration of imprisonment is three years including a penalty.
In case of offense exceeds INR 100 lakh to avoid tax, the period of imprisonment is one year along with a penalty. A taxpayer must comply with the GST rules.
The violation of GST rules leads to attracting penalties and punishment. If there is any confusion among the taxpayers they are free to consult experts at the GST council for any of their queries. Though, the best advice to stay away from such penalties and imprisonment is to comply with the GST laws strictly.