ECO Penalties: Section 122(1B), Interest and Late Fee

ECO Penalties explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.

Most platforms think of TCS risk as "did we collect the right amount?" The Act has a second, less obvious exposure that has nothing to do with amounts at all — section 122(1B) penalises who you let onto the platform and what you said about them.

Section 52(6) read with section 50(1) charges interest at 18% where the operator fails to deposit TCS by the 10th of the following month. Section 47 imposes a late fee of ₹100 a day under CGST plus ₹100 under SGST — ₹200 a day, capped at ₹10,000 — for a late GSTR-8. Section 122(1)(vi) penalises non-collection, short collection, or collection without payment at ₹10,000 or the amount involved, whichever is higher. And section 122(1B), inserted by Notification No. 28/2023-CT dated 31.07.2023 and amended by the Finance Act, 2024, penalises the operator for allowing an unregistered person to supply, allowing an ineligible inter-State supply, or misreporting supplies by an exempted person — at ₹10,000 or the tax that would have been involved, whichever is higher.

Interest: section 52(6) with section 50(1)

Where a tax collector fails to deposit TCS through GSTR-8 within 10 days of the month succeeding the month of collection, he is liable to interest at 18% for the period of delay, under section 50(1).

And interest runs on all three failures, not only late payment. The Handbook confirms: "interest is payable for non-collection, short collection as well as where the tax is collected but deposited after the due date."

Section 52(6) also charges interest on self-correction. An operator who discovers an omission or incorrect particular in a filed GSTR-8 — otherwise than through scrutiny, audit, inspection or enforcement — rectifies it in the statement for the month in which it is noticed, subject to interest under section 50(1).

Late fee: section 47

Where the tax collector fails to furnish the return by the due date, section 47 imposes ₹100 for every day during which the failure continues, subject to a maximum of ₹5,000.

An equivalent late fee is payable under the SGST Act, so the Handbook's arithmetic is: "thereby making the total late fee two hundred rupees per day, subject to a maximum of ten thousand rupees."

And by section 20 of the IGST Act, the provision applies mutatis mutandis to returns required under that Act.

Penalty on the collection itself: section 122(1)(vi)

The penalty applies in three situations, which the Handbook lists:

• TCS is not collected;
• the amount collected is less than the amount required to be collected; or
• TCS is collected but not deposited by the due date.

The quantum is the higher of:

• ₹10,000, or
• the amount of tax not collected, short collected, or not paid to the Government.

In the statutory language, section 122(1)(vi) covers a taxable person who fails to collect tax in accordance with section 52(1), collects less than required, or fails to pay to Government the amount collected under section 52(3) — with the penalty being ₹10,000 or an amount equivalent to the tax evaded, the tax not deducted under section 51 or short deducted or deducted but not paid, or tax not collected under section 52 or short collected or collected but not paid, or ITC availed, passed on or distributed irregularly, or refund claimed fraudulently, whichever is higher.

Note the "whichever is higher" structure. For a large platform, a systematic under-collection produces a penalty equal to the shortfall — not a fixed sum. The ₹10,000 operates as a floor for small defaults, not a cap.

Section 122(1B): the onboarding penalty

This is the provision that changes what a platform's compliance function has to look at, because none of its three limbs is about arithmetic.

Any electronic commerce operator liable to collect tax at source under section 52 which —

(i) allows a supply of goods or services or both through it by an unregistered person, other than a person exempted from registration by a notification issued under this Act, to make such supply;

(ii) allows an inter-State supply of goods or services or both through it by a person who is not eligible to make such inter-State supply; or

(iii) fails to furnish the correct details in the GSTR-8 statement of any outward supply of goods effected through it by a person exempted from obtaining registration under this Act,

— shall be liable to a penalty of ₹10,000, or an amount equivalent to the amount of tax involved had such supply been made by a registered person other than a person paying tax under section 10, whichever is higher.

Look at how precisely the three limbs mirror Notification No. 37/2023-CT. That notification requires the platform to allow supply only against an enrolment number, to block inter-State supply by such a person, and to report their supplies in GSTR-8. Section 122(1B) is the sanction for each of those three duties, in the same order. The enrolment number regime →

And read the measure of the penalty. It is "the amount of tax involved had such supply been made by a registered person other than a person paying tax under section 10" — that is, the full regular-rate tax on the supply, not the composition rate and not the TCS. A single high-value supply by an ineligible seller can produce a penalty far exceeding anything the platform earned on it.

The provision's history: inserted by Notification No. 28/2023-CT dated 31 July 2023. The Handbook notes that "as the above penalties were mainly to have control on e-commerce operators who are liable to collect tax, the same was amended through the Finance Act of 2024."

The default amount is determined under section 73, 74 or 74A of the CGST Act — so the ordinary adjudication machinery, with its limitation periods, applies.

The information notice: section 52(12) to (14)

A fourth exposure, easy to overlook because it is not about tax at all.

Section 52(12) — an authority not below the rank of Deputy Commissioner may serve a notice, before or during any proceedings, requiring the operator to furnish details of (a) supplies effected through it during any period, or (b) stock of goods held by suppliers in godowns or warehouses managed by the operator and declared by those suppliers as additional places of business.

Section 52(13) — the operator must furnish the information within fifteen working days of service.

Section 52(14) — failure attracts a penalty which may extend to ₹25,000, "without prejudice to any action that may be taken under section 122".

Those last words matter. The ₹25,000 is not in substitution for anything; it stacks.

And one thing that is not the platform's problem

The suppliers' own liability is unaffected. "The related output tax payable by the suppliers will not be affected irrespective of the fact whether tax is collected or not at source by the e-commerce operator, since charging section 9 of CGST Act, 2017 is independent of section 52… Not collecting the tax at source will have bearing on interest and penalty payable by the e-commerce operator but will have no obligation for the suppliers supplying through them."

The failure is entirely the operator's — which is also why the operator cannot argue that no revenue was lost because the supplier paid its own tax.

Key takeaways

• 18% interest under section 52(6) with section 50(1) for non-collection, short collection or late deposit.
• ₹200 a day late fee (₹100 CGST + ₹100 SGST) for a late GSTR-8, capped at ₹10,000.
• Section 122(1)(vi): ₹10,000 or the amount not collected, short collected or not paid — whichever is higher.
• Section 122(1B) penalises who was allowed to supply, ineligible inter-State supply, and incorrect GSTR-8 details for exempted persons.
• Its measure is the full regular-rate tax on the supply had it been made by a registered non-composition person.
• Section 52(14): up to ₹25,000 for not answering a section 52(12) notice within fifteen working days, without prejudice to section 122.
• Defaults are determined under section 73, 74 or 74A.
• The supplier's own liability is independent of the operator's failure.

Read next

• The Enrolment Number and the Composition Route for Selling Through a Platform
• GSTR-8, GSTR-9B and Claiming TCS Credit in the Cash Ledger
• Warehouses, "Fulfilled by ECO" and the Additional Place of Business

Disclaimer: Positions stated as on 5 September 2026, based on sections 47, 50(1), 52 and 122 of the CGST Act, 2017, section 20 of the IGST Act, 2017 and Notification No. 28/2023-Central Tax dated 31 July 2023 with the amendment made by the Finance Act, 2024, as reproduced in the ICAI Handbook on E-Commerce Operators under GST (updated to 15 December 2025).