Meaning of term Penalty under Indian Tax

Posted on 30 March 2023 Category : Indian Tax Terms

What is term Penalty under Indian Tax

The details about term Penalty under Indian Tax are explained here.

Term Penalty:

The term Penalty means legal or official punishment, such as a term of imprisonment. Some other form of punishment, such as a fine or forfeit for not fulfilling a contract. Loss, suffering, or other unfortunate result of one's own action, error, etc.

Penalty for certain offences

Where a taxable person who––

i. supplies any goods or services or both without issue of any invoice or issues an incorrect or false invoice with regard to any such supply;

ii. (ii) issues any invoice or bill without supply of goods or services or both in violation of the provisions of this Act or the rules made thereunder;

iii. collects any amount as tax but fails to pay the same to the Government beyond a period of three months from the date on which such payment becomes due;

iv. collects any tax in contravention of the provisions of this Act but fails to pay the same to the Government beyond a period of three months from the date on which such payment becomes due;

v. fails to deduct the tax in accordance with the provisions of sub-section (1) of section 51, or deducts an amount which is less than the amount required to be deducted under the said sub-section, or where he fails to pay to the Government under sub-section (2) thereof, the amount deducted as tax;

vi. fails to collect tax in accordance with the provisions of sub-section (1) of section 52, or collects an amount which is less than the amount required to be collected under the said sub-section or where he fails to pay to the Government the amount collected as tax under sub-section (3) of section 52;

vii. takes or utilises input tax credit without actual receipt of goods or services or both either fully or partially, in contravention of the provisions of this Act or the rules made thereunder;

viii. fraudulently obtains refund of tax under this Act;

ix. takes or distributes input tax credit in contravention of section 20, or the rules made thereunder;

x. falsifies or substitutes financial records or produces fake accounts or documents or furnishes any false information or return with an intention to evade payment of tax due under this Act;

xi. is liable to be registered under this Act but fails to obtain registration;

xii. furnishes any false information with regard to registration particulars, either at the time of applying for registration, or subsequently;

xiii. obstructs or prevents any officer in discharge of his duties under this Act;

xiv. transports any taxable goods without the cover of documents as may be specified in this behalf;

xv. suppresses his turnover leading to evasion of tax under this Act;

xvi. fails to keep, maintain or retain books of account and other documents in accordance with the provisions of this Act or the rules made thereunder;

fails to furnish information or documents called for by an officer in accordance with the provisions of this Act or the rules made thereunder or furnishes false information or documents during any proceedings under this Act;
supplies, transports or stores any goods which he has reasons to believe are liable to confiscation under this Act;

xix. issues any invoice or document by using the registration number of another registered person;

xx. tampers with, or destroys any material evidence or document;

xxi. disposes off or tampers with any goods that have been detained, seized, or attached under this Act,

He shall be liable to pay a penalty of ten thousand rupees or an amount equivalent to the tax evaded or the tax not deducted under section 51 or short deducted or deducted but not paid to the Government or tax not collected under section 52 or short collected or collected but not paid to the Government or input tax credit availed of or passed on or distributed irregularly, or the refund claimed fraudulently, whichever is higher.

Any registered person who supplies any goods or services or both on which any tax has not been paid or short-paid or erroneously refunded, or where the input tax credit has been wrongly availed or utilised,—

for any reason, other than the reason of fraud or any wilful misstatement or suppression of facts to evade tax, shall be liable to a penalty of ten thousand rupees or ten per cent. of the tax due from such person, whichever is higher;
for reason of fraud or any wilful misstatement or suppression of facts to evade tax, shall be liable to a penalty equal to ten thousand rupees or the tax due from such person, whichever is higher.

Any person who––

aids or abets any of the offences specified in clauses (i) to (xxi) of sub- section (1);
acquires possession of, or in any way concerns himself in transporting, removing, depositing, keeping, concealing, supplying, or purchasing or in any other manner deals with any goods which he knows or has reasons to believe are liable to confiscation under this Act or the rules made thereunder;
receives or is in any way concerned with the supply of, or in any other manner deals with any supply of services which he knows or has reasons to believe are in contravention of any provisions of this Act or the rules made thereunder;
fails to appear before the officer of central tax, when issued with a summon for appearance to give evidence or produce a document in an inquiry;
fails to issue invoice in accordance with the provisions of this Act or the rules made thereunder or fails to account for an invoice in his books of account, shall be liable to a penalty which may extend to twenty-five thousand rupees.

Penalty for failure to furnish information return

If a person who is required to furnish an information return under section 150 fails to do so within the period specified in the notice issued under sub-section (3) thereof, the proper officer may direct that such person shall be liable to pay a penalty of one hundred rupees for each day of the period during which the failure to furnish such return continues:

Provided that the penalty imposed under this section shall not exceed five thousand rupees.

Fine for failure to furnish statistics

If any person required to furnish any information or return under section 151, —

without reasonable cause fails to furnish such information or return as may be required under that section, or
wilfully furnishes or causes to furnish any information or return which he knows to be false,

He shall be punishable with a fine which may extend to ten thousand rupees and in case of a continuing offence to a further fine which may extend to one hundred rupees for each day after the first day during which the offence continues subject to a maximum limit of twenty-five thousand rupees.

General penalty

Any person, who contravenes any of the provisions of this Act or any rules made thereunder for which no penalty is separately provided for in this Act, shall be liable to a penalty which may extend to twenty-five thousand rupees.

The information on term Penalty under Indian Tax is detailed above. Comment below your thoughts on term Penalty under Indian Tax.

Learn Exports Imports Free, Click here

Click here to know GST rate of your goods or service

Mechanism of Payment of GST tax in India

Levy of late fee for GST Tax returns filing in India

Notice to GST return filing defaulters

When to file Annual Return of GST online?

Procedures to claim reduction in output tax liability of GST in India

Procedures to claim Input Tax Credit under GST in India

When to file first Return of GST tax in India?

GST Tax returns filing – Who, How and When

How is time of supply accounted under GST Tax Calculation