GST Nil Returns Must Be Filed on Time or Can Cost You ₹1 Lakh Penalty

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.

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