PhyntaraTutorial · GST · The law in practice
10 · Late fees, interest, penalties, and notices
What delay costs, what fraud costs, and what “the portal will auto-calculate” does and does not mean. About 12 min. As of August 2026.
This tutorial explains GST the way a new founder or accounts clerk needs it, and how the same work is done in Phyntara. It is teaching, not a legal opinion. Thresholds, due dates, and late fees change when the GST Council notifies them. Your CA files. Confirm the live rule on gst.gov.in before you act on a rupee.
GST punishment comes in layers. Late fee is for late returns. Interest is for late tax money. Penalty is for short tax, fake credit, fake invoices, and a long Section 122 list. Notices are how the department talks to you. Do not ignore a DRC or ASMT on the portal.
Late fee (Section 47) — GSTR-1 and GSTR-3B
Statute starts at ₹50 per day (₹25 CGST + ₹25 SGST/UTGST) while the return is late, including a nil return. Notifications (19/2021, 20/2021 and later) cap the fee by turnover. Commonly taught caps from the June 2021 return period onward:
| Return | Nil return (typical cap) | AATO up to ₹1.5 crore | AATO ₹1.5–5 crore | AATO above ₹5 crore |
|---|---|---|---|---|
| GSTR-1 or GSTR-3B | ₹500 total (₹250 + ₹250) | ₹2,000 total | ₹5,000 total | ₹10,000 total |
IGST late fee follows the same idea when IGST is involved. Composition and annual returns have their own tables. The portal often auto-adds late fee to the next 3B. Still check; do not assume zero.
Interest (Section 50)
- Delayed payment of tax: 18% per year, generally on the net cash tax (output minus eligible credit), from the day after the due date until you pay. Rule 88B is the fine print.
- Wrongly availed and utilised ITC: often 18%; older 24% stories still appear in notices — your CA reads the section that applies to that year.
- If a demand proceeding for fraud-style short tax has started, the “net cash” comfort can disappear. Pay on time.
You owed ₹1,00,000 GST and had ₹1,00,000 eligible credit. You filed 3B 10 days late but the net cash was nil. Late fee still applies. Interest on delayed net cash may be nil. If net cash was ₹40,000 unpaid, interest runs on that ₹40,000 at 18% for the days of delay, plus late fee.
Penalty for unpaid self-assessed tax
If you declare tax in 3B / 1 and do not pay, the Act (including Section 74A for periods from FY 2024–25) can add a penalty — commonly discussed as 10% of tax or ₹10,000, whichever is higher, after a short window. Periods up to FY 2023–24 still live under Sections 73 (no fraud) and 74 (fraud / suppression).
Demand: 73 / 74 / 74A in one screen
| When you pay | No fraud (typical) | Fraud / wilful (typical) |
|---|---|---|
| Before show-cause notice | Tax + interest; penalty often dropped | Tax + interest + ~15% penalty |
| Soon after notice | Tax + interest + 10% or ₹10,000 | Tax + interest + 25% |
| After order, if still unpaid | Tax + interest + 10% or ₹10,000 | Up to 100% of tax as penalty |
These percentages are the teaching version of the sections. The order that arrives on your GSTIN is the one that binds you. Reply in time. 74A unified the demand track for FY 2024–25 onward; older years stay on 73/74.
Section 122 — the offence list (₹10,000 or tax involved)
Issuing an invoice without supply, taking credit on such invoices, collecting GST and not paying it within 3 months, not issuing an invoice, e-way without documents, and a long list. Fake-invoice ITC is how companies get raided. Do not buy “bills” from a GSTIN that never supplied you.
E-invoice and e-way penalties
- B2B without IRN when you are under e-invoice: the document is not a valid tax invoice. The buyer’s credit is at risk. Your customer will scream. Phyntara prints that warning on the PDF until IRN exists.
- Moving goods without e-way: detention, seizure, penalty (Section 129) — often tax + 100% or specified amounts. The lorry waits. You pay.
GSTIN cancellation and blocking
Non-filing can lead to suspension/cancellation. A cancelled vendor GSTIN is a pay freeze in Phyntara: do not NEFT. Your own cancellation is how you lose the right to issue tax invoices. Keep filing nil if you must.
Inspection, audit, search
Section 65 audit, 66 special audit, 67 search. Keep bills, IRN, e-way, and bank UTRs in one place. That is the filing pack. WhatsApp folders are how notices become assessments.