⚠️ Free Reference · 2026–27
GST Penalty Guide —
Every Fine, How to Avoid It
Every GST penalty, interest rate, and section reference for 2025–26. Late return filing, ITC fraud, non-registration, e-invoicing violations, and more — with exact section numbers.
✅ 40+ penalties covered
✅ Exact section references
✅ How-to-avoid for each
✅ 2026–27 updated
⚠️ GST Penalty Reference
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📅 Late Filing Penalties
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TaxClue — GST Penalty Guide 2026–27
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Complete Reference
GST Penalties — All Rates & Sections
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⚡ Interest Rates at a Glance (Most Common)
18%
Late tax payment
Sec 50(1) — per annum
Sec 50(1) — per annum
24%
Excess / fraudulent ITC
Sec 50(3) — per annum
Sec 50(3) — per annum
₹50/day
Nil return late filing
GSTR-3B / GSTR-1
GSTR-3B / GSTR-1
Late Return Filing Penalties
| Return | Violation | Penalty | Section | How to Avoid |
|---|---|---|---|---|
| GSTR-3B (with tax) | Filed after due date | ₹50/day (₹25 CGST + ₹25 SGST) · Max ₹10,000 per return | Sec 47 | Set calendar reminders. Use QRMP if turnover ≤₹5Cr. |
| GSTR-3B (nil) | Nil return filed late | ₹20/day (₹10 CGST + ₹10 SGST) · Max ₹500 per return | Sec 47 | File before 20th even when nil. Automation tools help. |
| GSTR-1 | Filed after due date | ₹50/day · Max ₹10,000 (nil: ₹20/day · Max ₹500) | Sec 47 | GSTR-1 blocks GSTR-3B if not filed. File by 11th. |
| GSTR-9 (Annual) | Filed after Dec 31 | ₹200/day (₹100 CGST + ₹100 SGST) · Max 0.25% of turnover | Sec 47 | Engage CA for annual return preparation by Oct. |
| GSTR-9C (Reconciliation) | Filed with delay | Same as GSTR-9 — ₹200/day combined | Sec 47 | File GSTR-9C by Dec 31 with GSTR-9. |
| GSTR-4 (Composition) | Filed after April 30 | ₹50/day · Max ₹2,000 | Sec 47 | Composition dealers file annually — set April 30 reminder. |
| GSTR-7 (TDS) | Filed after 10th | ₹50/day · Max ₹2,000 per return | Sec 47 | TDS deductors must file by 10th of following month. |
| GSTR-8 (TCS / E-com) | Filed after 10th | ₹50/day · Max ₹2,000 per return | Sec 47 | E-commerce operators must file TCS return by 10th. |
💡 Note: Budget 2024 rationalised late fees for small taxpayers. Late fee waiver schemes are announced periodically — watch for CBIC circulars.
Interest on Tax & ITC
| Situation | Rate | Basis | Section | Notes |
|---|---|---|---|---|
| Late payment of output tax | 18% p.a. | On tax amount, from due date to payment date | Sec 50(1) | Even 1 day late attracts interest. Pay advance if unsure of liability. |
| Excess ITC claimed and utilised | 24% p.a. | On excess ITC amount, from due date | Sec 50(3) | Interest only if ITC was utilised — not merely claimed. |
| Reversal of ITC on non-payment to supplier (>180 days) | 18% p.a. | On ITC reversed, from date of availment | Rule 37 | If you pay supplier after reversal, re-claim ITC in that month. |
| Wrongly availed and utilised ITC (Sec 16(4) violation) | 24% p.a. | From the date of availment | Sec 50(3) | ITC on invoices older than 3 years not claimable — time-bar rule. |
| Tax short-paid (without fraud) | 18% p.a. | + Penalty 10% of tax or ₹10,000 | Sec 73 | Applicable for genuine errors. File DRC-03 for voluntary payment. |
| Tax evaded (with fraud/suppression) | 18% p.a. | + Penalty up to 100% of tax | Sec 74 | Willful fraud attracts criminal prosecution under Sec 132. |
💡 Note: Interest is computed on a per-day basis: Amount × Rate ÷ 365 × Days. Always pay before the due date to avoid even one day's interest accumulation.
ITC Violations & Fraud
| Violation | Penalty | Section | How to Avoid |
|---|---|---|---|
| Wrong ITC claim (without fraud) | Tax + 10% of tax (min ₹10,000) | Sec 73 | Reconcile GSTR-2B vs purchase register every month. |
| ITC fraud (fake invoices, inflated claims) | Tax + up to 100% of tax | Sec 74 | Never accept invoices from non-compliant / shell suppliers. |
| ITC availed on ineligible items (Sec 17(5) blocked credits) | Tax + 10% or 100% (fraud) | Sec 73/74 | Cars, food, club memberships, personal expenses — ITC blocked. |
| ITC on non-filed supplier returns | Tax + interest | Rule 36(4) | Check GSTR-2B before claiming — ITC only if supplier has filed GSTR-1. |
| Circular trading (fake ITC chain) | Tax + 100% + criminal prosecution | Sec 74 + Sec 132 | Criminal offence — up to 5 years imprisonment for ₹5 Cr+ evasion. |
| ITC reversal non-compliance (GSTR-2B mismatch) | Demand + 18% interest | Sec 73 | Accept-Reject-Pending in IMS to keep GSTR-2B clean. |
💡 Note: From FY 2024–25, the Invoice Management System (IMS) requires you to actively accept or reject supplier invoices. Unresolved mismatches auto-block ITC.
E-Invoicing Violations
| Violation | Penalty | Section | How to Avoid |
|---|---|---|---|
| Not generating IRN (invoice without e-invoice where mandatory) | ₹10,000 per invoice | Sec 122 | Mandatory for B2B where turnover >₹5Cr. Enable on IRP portal. |
| Wrong details in e-invoice | ₹25,000 per invoice (incorrect invoice) | Sec 125 | Validate GSTIN, HSN, tax amounts before generating IRN. |
| E-invoice cancelled but physical invoice used | ₹10,000 per invoice | Sec 122 | Cancel within 24 hours. Cannot cancel after e-way bill is generated. |
| Recipient-side: accepting goods without valid e-invoice | ITC denied + demand | Rule 36 | Verify IRN via QR code before accepting delivery. |
💡 Note: E-invoicing is now mandatory for all B2B transactions where aggregate turnover exceeds ₹5 Cr in any financial year. Check your turnover in GSTN immediately if borderline.
E-Way Bill Violations
| Violation | Penalty | Section / Rule | How to Avoid |
|---|---|---|---|
| Goods movement without e-way bill (>₹50,000) | ₹10,000 or tax amount (whichever is higher) | Sec 129 | Generate before despatch. Transporter responsibility also. |
| Expired e-way bill | Goods detained + ₹10,000 or tax, whichever higher | Sec 129 | Extend validity before expiry — at least 8 hours before midnight. |
| E-way bill details mismatch with invoice | Goods detained + penalty | Sec 129 | GSTIN, value, HSN, destination must exactly match invoice. |
| Goods detained (detained goods released only after penalty + tax payment) | Tax + 100% penalty (repeat: 200%) | Sec 129 | First offence: pay tax + 100%. Second: tax + 200%. |
| Confiscation (goods not released) | Tax + 100% fine + confiscation | Sec 130 | Goods may be auctioned if penalty not paid. Avoid at all costs. |
| Transporter moving goods without e-way bill | ₹10,000 per consignment | Sec 122 | Ensure driver has e-way bill printout / digital copy. |
💡 Note: E-way bill validity: 1 day per 200 km for regular cargo, 1 day per 20 km for ODC (over-dimensional cargo). Plan delivery timelines accordingly.
Registration Violations
| Violation | Penalty | Section | How to Avoid |
|---|---|---|---|
| Not registering despite being liable | Tax evaded + 100% penalty | Sec 122(1) | Register before crossing threshold or starting inter-state supply. |
| Operating after GST cancellation | Tax + 100% penalty | Sec 122(1) | Do not make taxable supplies after receiving cancellation order. |
| Not displaying GSTIN on signboard / invoices | ₹10,000 | Sec 125 | Display GSTIN prominently at all business premises and invoices. |
| Failure to furnish migration / amendment details | ₹25,000 | Sec 125 | File REG-14 for changes within 15 days of change in core fields. |
| Fake / fraudulent GST registration | ₹50,000 or 100% of ITC fraudulently availed | Sec 122/132 | Verify GSTIN of all suppliers on GST portal before dealing. |
💡 Note: CBIC runs periodic GST registration verification drives. Fake GSTINs are being deactivated in bulk. Verify supplier GSTINs via the GST portal before finalising any deal.
Other Offences & Penalties
| Offence | Penalty | Section | Notes |
|---|---|---|---|
| Not maintaining accounts / records | ₹10,000 per day of default | Sec 122 | Maintain for 72 months (6 years) from annual return due date. |
| Not providing information to GST officer | ₹10,000 + imprisonment up to 1 year | Sec 122/132 | Respond to all notices within the prescribed time. |
| Obstruction of GST officer | ₹10,000 + imprisonment up to 1 year | Sec 132 | Full cooperation during audits and inspections is mandatory. |
| Issuing invoice without supply (fake invoice) | ₹10,000 or 100% of tax (whichever higher) | Sec 122(1)(ii) | Criminal offence — up to 5 years jail for >₹5 Cr. |
| Collecting tax but not depositing to govt | 100% of tax collected | Sec 122(1)(viii) | Deposit CGST + SGST/IGST by 20th — never hold collected tax. |
| Tax evasion >₹5 Cr (cognizable offence) | Imprisonment up to 5 years + fine | Sec 132 | GST department can arrest without warrant for evasion >₹5 Cr. |
| Abetment (helping others evade tax) | Same as principal offence | Sec 132(1)(i) | CAs and tax professionals can be prosecuted for abetment. |
| Failure to deduct TDS (GST TDS) | ₹100/day · Max ₹5,000 | Sec 47 | Govt entities >₹2.5L contract value must deduct GST TDS. |
💡 Note: All penalties under Sec 122–138 may be waived or reduced if disclosed voluntarily via DRC-03 before a notice is issued. Voluntary disclosure = lower penalty.
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