Penalty for Not Registering or Late Registering Under GST

Penalty For Not Registering/ Late Registering Under the GST Act

Under the provisions of the GST Act in India, there is a specific penalty for not taking GST registration, and this penalty for non registration under GST is applicable even in cases of delayed registration. Before moving towards the penalty for not obtaining GST registration clause, first, we need to understand who is liable for registration under the GST Act.

Persons/Suppliers Liable for Registration Under GST

Every supplier is responsible to getting registered under the GST Act when the aggregate turnover of goods or services or both in a financial year exceeds INR 20 Lakh (twenty lakh rupees). Where such supplier deals in goods or services or both located in the Special Category States -

• Arunachal Pradesh
• Assam
• Manipur
• Meghalaya
• Mizoram
• Nagaland
• Sikkim
• Tripura
• Himachal Pradesh
• Uttarakhand

Then, they are liable to register under the GST Act if the aggregate turnover exceeds INR 10 Lakh (ten lakh rupees) in a financial year. Failure or delay in getting registered under the Act will attract a penalty for not registering under GST and they will have to face the consequences of non-registration under GST.Penalty for not obtaining GST registration or in instances where registration is mandatory, penalties can be imposed for neglecting to apply for registration. Therefore, complying with GST regulations is vital to avoid penalty for not taking GST registration and maintain smooth operations. 

As per section 122 of the CGST Act, a person/supplier exceeds the threshold limit for GST registration and becomes taxable or is legally bound to get registered, and if a person has failed to obtain the registration the penalty is equivalent to: a penalty for non-registration under GST shall be INR 10,000/- (ten thousand rupees) or ten per cent (10%) of the tax due from such person/supplier, whichever is higher.

Examples: Mr F crosses the threshold limit and becomes liable for GST registration but fails to register under GST, and the total tax due from the date of becoming liable for GST registration till the date of actual registration is INR 1,20,000/-. The late registration penalty for not taking GST registration will be INR 12,000/- (1,20,000 x 10%) will be applicable. If Mr. F fails to register under GST, and the total tax due by him is INR 80,000/-, then, the consequences of non-registration under GST will be a penalty of INR 10,000/-.

Penalty for Late Application Registration Under the GST Act:

There is no special provision for a penalty for late registration under GST registration by a taxable person/supplier if the GST authorities catch any taxable person/supplier applying late for GST registration, the penalty will be levied on such person/supplier: The higher of INR 10,000/- or the total amount of tax evaded by the taxable person/supplier.

What Happens if a Business is Not Registered for GST on Time?

 If a business is not registered for GST on time:

1. Detention of goods and vehicles.
2. Confiscation of goods and vehicles.
3. The person/supplier cannot claim the input tax credit.
4. The person/supplier cannot transfer the input tax credit.
5. The penalty of INR 10,000/- or total tax invaded whichever is higher.

Penalty For Not Displaying GST Number at the Declared Business Place:

In accordance to Rule 18 of the CGST Rules 2017;

1. Every registered person/business must mandatorily display the registration certificate at the principal place of business and the additional place of business.
2. Every registered person/business must mandatorily display the Goods and Services Tax identification number on the name board at the principal business place and the additional business place. Although there is no specific penalty for the same, the general penalty under the GST Act is INR 25,000 which will be applicable in this case as well.

Penalty For Not Registering Additional Place of Business Under GST 

Although there is no specific penalty for not registering an additional place of business under GST, the general penalty under the GST Act is INR 25,000 which will be applicable in this case as well.

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