GSTR 3B is a Return which is to be filled by Regular GST Tax Payer. It contains the summary details of outward Supplies made and the details of Input Tax Credit. Usually, the due date for filling of GSTR 3B is 20 of next month but Government can extend the due date. What will happen if you do not file your GSTR 3B within due date? What will be the late fee, penalty and other consequences? Let's find out:
1. Late Fees under Section 47 of the CGST Act, 2017 - Starts Immediately after due date
Late fees is the first consequence you will face for non filling of GSTR 3B. The late fees will increase everyday until it hits the capping limit. The fee will be automatically added to the next month's GSTR 3B. Moreover you can't edit it or you can't proceed to file the return until you pay the late fees.
Note : Currently for GSTR 3B of July 2017 to April 2021, the maximum late fees is capped at Rs. 500 if you do not have any Tax Liability and at Rs. 1,000 if you have tax liability. But this special waiver is available only if you file the pending returns on or before 31st August 2021.
June'21 onwards, the late fees will be levied and capped as follows :
|Tax Liability||Per Day||Maximum|
|AATO* UPTO 1.5 Crores||AATO Between 1.5 crores to 5 Crores||AATO above 5 Crores|
|Nil Liability||Rs. 20||Rs. 500|
|Others||Rs. 50||Rs. 2,000||Rs. 5,000||Rs. 10,000|
|AATO means Annual Aggregate Turnover. Aggregate Turnover includes taxable supplies, exempt supplies, export, inter-state supplies of persons having same PAN. The calculation will be based on all India Basis. In layman's language, AATO can be referred as the yearly sales.|
Example: Suppose Mr. Forget did not file the GSTR 3B from December 2021. The AATO of the company is Rs. 1.4 Crores. On enquiry by the management at year end, he find out this mistake and approached you to compute the total late fees. What will be total late fees if you assumed that he will file all the pending returns on 01st April 2022.
Answer : Here Mr. Forget did not file the GSTR 3B from December 2021. Now the GST system will not allow him to file the subsequent GSTR 3B, the late fees will be calculated for all the months separately. The total late fees payable if Mr. Forget files the returns on 01st April 2022 will be :
|Month||Due Date*||Filling Date||Delay||Late fee if Nil Liability||Late Fee if other|
|December||20-01-2022||01-04-2022||71||Capped at Rs. 500||Capped at Rs. 2,000|
|January||20-02-2022||01-04-2022||40||Capped at Rs. 500||2,000.00|
|Total||Rs. 1,240.00||Rs. 4,600.00|
|*It is assumed that Government did not extend the due date.|
So you can see that there is a domino effect for not filling the GSTR 3B. The late fee will continuously increase until it hits the capping limit.
2. Interest under section 50 - Starts Immediately after due date
If a taxpayers is required to pay tax within prescribed time but fails to pay, then for the delay in payment, interest @18 percent will be levied. The interest will be payable only if you use cash ledger balance to pay taxes. In other words, if you have enough input tax credit and you do not paid taxes using net banking/challan/balance already added in cash ledger, then there won't be any interest leviable on you. There is no concept of maximum capping in case of interest.
Continuing our previous example, suppose Mr. Forget ask you about the calculation of interest also. For that, he told you the monthly Input tax Credit for each month is Rs. 18,000 and output tax is Rs. 28,000. So every month Rs. 10,000 will be paid using Cash Ledger Balance. Thus the interest will be as follows:
|Month||Due Date*||Payment Date||Delay||Paid by debiting cash ledger||Interest|
Thus for non filling for GSTR 3B, the interest will also be payable and this amount will be in addition to the Rs. 4,600 Late fees calculated above.
3. Restricting E-Waybill Generation Under Rule 138E- Restriction will be applicable if two consecutive GSTR 3B is not filled
If a person has not furnished the returns for a consecutive period of two tax periods , then the generation of E-Way Bill will be restricted for all types of outward supply of that person. Once the GST Returns are filled, the restrictions will be lifted. E-waybill restriction will result in restriction of:
- Outward supply valued more that 50,000 outside the state ; and
- Outward Supply of specified value as notified by the State Government inside the state.
Thus in our example, the E-Waybill Generation of the company will be restricted for not filling of returns of December and January.
4. Penalty Under Section 122(1)(iii) - Levy after 3 months of due date
For certain specific offences, there are provisions of penalties in GST. One of such offence is not paying collected tax amount within 3 months from due date. The Penalty will be equal to the amount of tax collected subjected to a minimum of Rs. 20,000. Thus in continuation of the above example, the due date for paying tax collected of December month is 20th January. If Mr, Forget do not pay the taxes within 20th April, along with the late fees and interest, penalty of Rs, 28,000 will be levied.
5. Suspension and subsequent cancellation of GST Registration under Section 29(2) - May be initiated after 6 Months of Due date
If a regular taxpayer do not file return for a continuous period of six months, then GST Officer may cancel the GST registration of such person. Before cancellation, officer will issue a Notice seeking clarification from such person and that person is required to reply in 7 workings days, giving reasons to officer for not cancelling the GST registration. Although it is not compulsory for officer to initiate the cancelation immediately after the non filling of 6th consecutive months return, but if officer choose to initiate the procedure of your GST Registration cancellation, then your GSTIN will be suspended. Until the suspension is revoked, the registered person can not supply any Taxable Goods. Thus it will hamper the business.
In continuation of our previous example, if Mr. Forget do not file the returns from December 2021 to May 2022, then officer may issue notice and initiate proceedings of cancellation of GST Registration.
6. Recovery Proceedings under Section 79
This is the most strict step that can be taken for not filling GSTR 3B. Lot's of reminders and notices are required to be served before initiation of the recovery. The flow of reminders and procedure is as under :
- First Reminder - 3 Days before Due Date to nudge taxpayer to file Return on or before due date
- Second Reminder - Immediately after due date to inform that return was not filled on due date
- Notice - 5 Days after Due date, notice in Form GSTR 3A, requiring the person to file returns in 15 Days
- Order - Anytime after the lapse of 15 Days of service of notice in form GSTR 3A, provided return is not filled. Officer may proceed to do assessment. Here officer will compute the tax liability to the best of his/her judgement. Officer may take into account the details of outward supply furnished by the person, inward supply shown by his/her suppliers, e-waybill details etc. Order will be issued in ASMT - 13 and summary will be uploaded in Form DRC -07 by officer.
- Initiation of proceedings : After 30 Days of serving of order in form ASMT -13, officer may initiate the recovery proceeding under section 78 and actual recovery under section 79. In the GST regime, officers are empowered to recover the tax payable from your debtors, refund dues, seized Goods, Property etc.
It is worthy to mention that officer may proceed to do assessment. The word "may" refers that it is not binding on officers that they have to compute the tax payable exactly on the expiry of the 15th Day of serving the notice in GSTR 3A. Officer may proceed on any day after completion of 15 days. Thus the exact timeline of initiation of recovery can not be quantified.
In the example, As on 01st April 2022, the notice in Form GSTR 3A must have been issued for December, January and February. Thus
- For February 2022, Mr. Forget can file the return so that officer don't proceed with tax computation.
- For January 2022, if Order in Form ASMT 13 is already issued, then Mr. Forget can file the GSTR 3B resulting in drop of further proceedings.
- For December 2021, if ASMT -13 is already issued and 30 days from service is completed, then Mr. Forget can pay the dues and file GSTR 3B to stop the initiation of actual recovery.
7. The last consequence: Restriction of Input Tax Credit of recipients
One of the main condition for claiming Input Tax Credit is payment of tax to the Government by supplier on supplies, for which the recipient is claiming Input Tax Credit . Now, If the GSTR 3B is not filled then it can be assumed that the supplier hasn't yet paid the taxes to the Government (There are exceptions too, like the taxes can be paid in GSTR 9 or through Form DRC 03 too. But generally most of the businesses pay taxes using GSTR 3B). This is the most ignored as well as debatable consequence of not filling GSTR 3B because there is no tool provided to the recipient to verify if the taxes of a particular inward supply is paid to the Government or not by the supplier.
Disclaimer: This article is written in simple language for easy understanding. You may refer to the relevant Notification, Circular, Rules and Acts for legal steps. Discrepancies if any may be bought to the notice of the author. Thank you.
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