1. Late Filing Penalty - Section 47
This is the most common penalty. If you file GSTR-1, GSTR-3B, GSTR-4, or any other return after the due date, late fees start from the very next day. Staying on top of your GST return filing schedule is the single most effective way to avoid this penalty entirely.
- Regular returns (with tax liability): ₹50 per day (₹25 CGST + ₹25 SGST)
- Nil returns (zero tax liability): ₹20 per day (₹10 CGST + ₹10 SGST)
- Maximum cap: ₹5,000 per return (₹500 for nil returns)
⚠️ Even if your business had zero sales in a month, you must still file a nil return. Skipping it still attracts ₹20/day in late fees.
2. Interest on Late Payment - Section 50
If GST is paid after the due date, interest is charged on the outstanding amount at 18% per annum. This runs from the day after the due date until actual payment. For wrongly availed Input Tax Credit (ITC), the interest rate goes up to 24% per annum.
3. General Penalty for Minor Offences - Section 125
When a violation does not fit into any specific penalty section, Section 125 applies. The maximum penalty here is ₹25,000. This covers technical non-compliances - like not displaying your GSTIN at your business place, or not keeping records in the prescribed format.
4. Penalty for Tax Fraud and Evasion - Section 122
Section 122 applies when someone issues a tax invoice without supplying goods, collects GST but does not deposit it, claims ITC based on fake invoices, suppresses turnover to pay less tax, or fails to register even though registration was required. Penalty: ₹10,000 or the tax amount evaded - whichever is higher. In fraud cases, this goes up to 100% of the tax evaded.
5. Penalty for Wrong Invoice or Incorrect HSN Code
Issuing a tax invoice with incorrect details - wrong HSN code, wrong GSTIN of recipient, or wrong tax amount - attracts a penalty of ₹25,000 under CGST + ₹25,000 under SGST, totalling ₹50,000 per incident in the worst case.
6. Penalty for Wrongly Claimed or Utilised ITC
If Input Tax Credit is claimed on purchases that were never made, or used for purposes not allowed under GST law, the penalty is 100% of the ITC wrongly availed or utilised, in addition to recovering the full amount with 24% interest.
7. Penalty for Not Registering Under GST
If a business is required to register under GST but deliberately avoids registration, the penalty is ₹10,000 or the amount of tax evaded - whichever is higher.
Section 122 of the CGST Act lists 21 specific offences. Before reviewing this list, make sure your business GSTIN is valid and active - you can check it using the GST Verification tool.
- Supplying goods or services without issuing a tax invoice
- Issuing a tax invoice without actually supplying goods or services
- Collecting GST but not paying it to the government within 3 months
- Not paying tax collected in contravention of GST law
- Failing to deduct TDS under GST where required
- Deducting TDS but not depositing it with the government
- Claiming ITC without receiving goods or services
- Taking ITC on a tax invoice issued by a non-existent person
- Distributing ITC in violation of input service distributor rules
- Falsifying accounts or producing false evidence
- Obtaining a refund through fraud
- Failing to maintain required accounts and records
- Suppressing sales or turnover to reduce tax liability
- Receiving goods or services that you know are in violation of GST law
- Providing false information during GST registration
- Obstructing or preventing a GST officer from performing duties
- Transporting goods without proper documentation (e-way bill, invoice)
- Tampering with or destroying evidence during a GST audit or investigation
- Failing to furnish information or documents when called upon
- Supplying goods liable to confiscation without proper documentation
- Issuing a GST invoice in the name of another registered person
Penalty rates are defined by the CGST Act and updated through CBIC circulars. For the latest rate notifications and amendments, visit the GST Updates page.
