Section-wise GST penalties for late filing, wrong ITC, fake invoicing and non-registration — with the rationalised late-fee slabs, interest rules and waiver schemes active in FY 2025-26.
GST has three layers of cost when you slip — late fees (per-day, mechanical), interest (18% on tax, 24% on wrong ITC), and penalties (under Sections 122 to 132 of the CGST Act). Most founders only know about the first one. This guide unpacks all three — with the exact slabs in force for FY 2025-26. The cheapest way to avoid all three is never missing a deadline — that is what our GST return filing service is for.
| Return | With tax | Nil return | Maximum cap |
|---|---|---|---|
| GSTR-1 | ₹50/day (₹25+₹25) | ₹20/day | ₹2,000 / ₹5,000 / ₹10,000 by turnover slab |
| GSTR-3B | ₹50/day | ₹20/day | Same turnover-based caps as above |
| GSTR-4 (composition) | ₹50/day | ₹50/day (₹20+₹20? no — flat ₹50) | ₹2,000 (₹500 if nil) |
| GSTR-5 | ₹50/day | ₹20/day | ₹5,000 |
| GSTR-6 (ISD) | ₹50/day | ₹50/day | ₹5,000 |
| GSTR-7 (TDS) | ₹50/day | — | ₹2,000 |
| GSTR-8 (TCS) | ₹50/day | — | Per return |
| GSTR-9 | ₹200/day (₹100+₹100) | — | 0.5% of state turnover |
| GSTR-9C | ₹200/day | — | 0.5% of state turnover |
| GSTR-10 (final) | ₹200/day | — | ₹10,000 |
| Aggregate turnover (preceding FY) | Max late fee per return |
|---|---|
| Up to ₹1.5 Cr | ₹2,000 (₹1,000 CGST + ₹1,000 SGST) |
| ₹1.5 Cr to ₹5 Cr | ₹5,000 (₹2,500 + ₹2,500) |
| Above ₹5 Cr | ₹10,000 (₹5,000 + ₹5,000) |
Interest is mandatory and not waivable — even genuine clerical errors attract interest until tax is fully discharged.
Section 122(1) lists 21 offences. For each, the penalty is the higher of ₹10,000 or the tax amount involved.
Any person who retains the benefit of a transaction described in clauses (i), (ii), (vii) or (ix) of 122(1) — typically fake invoicing or wrongful ITC — is liable to a penalty equal to the tax evaded or ITC availed.
| Reason for short payment | Penalty |
|---|---|
| Reasonable cause (not fraud) | 10% of tax or ₹10,000, whichever higher |
| Fraud, wilful misstatement, suppression | 100% of tax or ₹10,000, whichever higher |
| Aspect | Section 73 (non-fraud) | Section 74 (fraud) |
|---|---|---|
| Trigger | Non-payment, short payment, wrong refund, wrong ITC | Same — but with fraud/wilful intent |
| Penalty | 10% of tax or ₹10,000 | 100% of tax or ₹10,000 |
| Time limit (order) | 3 years from due date of annual return | 5 years from due date of annual return |
| Voluntary payment relief | No penalty + 18% interest before SCN | 15% penalty before SCN |
| Within 30 days of SCN | No penalty if tax + interest paid | 25% penalty if paid |
| Tax evaded | Maximum imprisonment |
|---|---|
| Above ₹5 Cr | Up to 5 years + fine |
| ₹2 Cr to ₹5 Cr | Up to 3 years + fine |
| ₹1 Cr to ₹2 Cr | Up to 1 year + fine |
| Repeat offence | Up to 5 years + fine |
Offences above ₹5 Cr involving fake invoices are cognisable and non-bailable under Section 132(5).
The GST Council periodically launches amnesty schemes. Recent examples:
Always check the latest CBIC notifications before relying on these reliefs — they are time-bound.
Only via specific CBIC amnesty notifications. The portal does not waive late fee on routine filings — even one day late attracts the per-day charge.
₹20/day (₹10 CGST + ₹10 SGST), subject to the turnover-based cap.
Yes — interest at 18% p.a. is calculated daily and rounded up to the nearest day.
Yes — under Section 73, voluntary payment with interest before SCN avoids penalty entirely. Under Section 74, the penalty drops to 15%.
0.5% of turnover in the state/UT (0.25% CGST + 0.25% SGST), capped to that figure.
Senior contributor at Taxpex Consultancy. Reviewed by a practising Chartered Accountant. Published on 25 May 2025 · Updated on 25 May 2025.
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