In the India the Goods and Services Tax (GST) system, a unified taxation system for the supply of goods and services or both, it aimed to streamline the indirect tax structure, enhance compliance, and boost revenue collection. However, to ensure timely compliance, the GST law imposes penalties for delays also a kind of punishment to taxpayers, commonly known as late fee deals U/s 47 of the CGST Act-2017 compute on daily basis. The concept of the late fee under GST plays a crucial role in encouraging taxpayers to file their returns on time and maintain discipline in the tax administration system.
Bare Act
Under Section 47 of CGST Act-2017, headed under Levy of late fee, says –
(1) Any registered person who fails to furnish the details of outward or supplies required under section 37or returns required under section 39 or section 45 or section 52 by the due date shall pay a late fee of one hundred rupees for every day during which such failure continues subject to a maximum amount of five thousand rupees.
(2) Any registered person who fails to furnish the return required under section 44 by the due date shall be liable to pay a late fee of one hundred rupees for every day during which such failure continues subject to a maximum of an amount calculated at a quarter per cent. of his turnover in the State or Union territory
Analysis
In the accordance of Section 47 of CGST Act-2017 the following GST returns attracted late fee when they filled after due date as;
GSTR-1 (Sec-37): Monthly or quarterly return for outward supplies.
GSTR-3B (Sec-39): Summary return of inward and outward supplies and payment of tax.
GSTR-4 (Section 44): Return for composition taxpayers.
GSTR-8 (Sec-45): Return for e-commerce operators.
GSTR-9 & 9C (Sec 44) : Annual return and reconciliation statement.
GSTR-10 (Sec-45): Final return on cancellation of registration.
The late fee is automatically calculated by the GST portal at the time of filing delayed returns it must be paid in cash from the electronic cash ledger and cannot be adjusted using input tax credit also it impact on input tax credit of taxpayer, the proper officer can exercise proceedings to block ITC, although in Indian law system prescribe one punishment for one offence because late fee is a type of economic punishment and same block ITC, also it has following other effects;
Filing of subsequent returns may be blocked if outstanding late fees from previous periods remain unpaid.
Continuous delay in filing returns can lead to significant financial liability.
Delays can prevent filing future returns due to portal restrictions.
Non-compliance may affect a taxpayer’s reputation and business standing.
Persistent default may invite scrutiny, show-cause notices, and penalties.
When GST returns filed late, taxpayer want waiver or reduction of late fee scheme and in this regard the government on the recommendation GST Council may, by notification, waive or reduce the late fee in certain circumstances to provide relief to taxpayers. For instance, during the COVID-19 pandemic, late fees were waived or reduced for delayed returns to ease the compliance burden during lockdowns and disruptions.
Conclusion
The late fee under GST serves as a deterrent against non-compliance and promotes timely filing of returns. While it is essential for enforcing discipline in the tax system, it should be balanced with reasonable relief provisions for genuine hardships. The government’s proactive approach in waiving or reducing late fees in special circumstances reflects an understanding of practical challenges faced by taxpayers. As GST evolves, the compliance structure, including the imposition of late fees, must remain robust yet taxpayer-friendly
Author Bio
Sir,
S.47 does not stipuate payment of Lat Fee for delayed filing of GSTR-9C. What are your observations in this regard.
CA Om Prakash Jai s/o J.K.Jain, Jaipur
Tel 9414300730/9462749040