GST Nil Returns: Avoid ₹1 Lakh Penalty by Filing on Time



Quick Summary
Even if your business has no activity, you must file nil GST returns like GSTR-3B monthly. Failing to do so can result in significant late fees, as demonstrated by a case where a taxpayer faced a ₹1 lakh penalty for not filing for 10 months. Additionally, if your GST registration is cancelled, remember to file the final return (GSTR-10) within 90 days to avoid further penalties.

A taxpayer has applied for the GST registration and he got the GSTIN in November 2020.

As there was no business activity - no sales, purchases or taxable supplies, he didn't filed any GST returns including GSTR-3B from the start.

Department Cancelled the Registration in September 2021

Since there were no transactions, all returns would have been filed “Nil” .

The GST registration was suo motu cancelled by the department in September 2021.

Still Received ₹110000 Penalty

GSTR-3B is a monthly return that must be filed every month even if there are no transactions.

As the taxpayer didn’t filed GSTR-3B for 10 months, a late fee was auto-calculated.

Late fees if not filed on time:

  • Normal Return: ₹50 per day (₹25 CGST + ₹25 SGST).
  • Nil Return: ₹20 per day (₹10 CGST + ₹10 SGST).
  • Maximum: ₹10,000 per return (₹5,000 CGST + ₹5,000 SGST).

System Computed For Filing Returns from Nov 2020

₹10,000 late fee per month

₹10,000 × 10 months = ₹1,00,000

Late Fees Applied For Failure to File GSTR-10

A taxable person whose GST registration is cancelled or surrendered has to file a return in Form GSTR-10 called as Final Return.

The final return in Form GSTR-10 is required to be filed within 90 days from the date of effective date of cancellation or date of cancellation order, whichever is later.

If not filed:

  • Late fee: ₹200 per day (CGST ₹100 + SGST ₹100)
  • Maximum penalty: ₹10,000

Total Late Fee Become

GSTR-3B not filed (10 months)₹10,000/month × 10 = ₹1,00,000
GSTR-10 not filed in 90 days₹200/day capped at ₹10,000

Points To Remember

  • File your monthly GSTR-3B, even if there is no business i.e, Nil return on time.
  • Cancel the GST Registration if your business is inactive or closed and apply for voluntary cancellation of GSTIN. Do not wait for the department to cancel it suo motu.
  • File GSTR-10 within 90 days of cancellation order to avoid ₹200 per day late fee, which maxes at ₹10,000.

You must still file a 'Nil' return, such as GSTR-3B, every month. Failure to do so can lead to late fees, calculated at ₹20 per day for nil returns, capped at ₹10,000 per return.

If you don't file GSTR-3B on time, the late fee is ₹50 per day (₹25 CGST + ₹25 SGST) for normal returns and ₹20 per day (₹10 CGST + ₹10 SGST) for nil returns, with a maximum of ₹10,000 per return. Not filing for 10 months could result in a ₹1 lakh penalty.

GSTR-10 is a final return that must be filed by a taxable person whose GST registration has been cancelled or surrendered.

The GSTR-10 final return must be filed within 90 days from the effective date of cancellation or the date of the cancellation order, whichever is later.

The late fee for not filing the GSTR-10 on time is ₹200 per day (₹100 CGST + ₹100 SGST), with a maximum penalty of ₹10,000.




About the Author

Finance Professional

I write about Income Tax, GST, TDS, RBI updates, government schemes, and personal finance in India. My focus is on simplifying complex tax and compliance topics into easy-to-understand guides that help readers stay updated with the latest financial rules, investment options, and regulatory changes.


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