The term GST or Goods and Service Tax has been one of the Indian economy’s latest additions. Introduced in April 2017, the Goods and Service Tax model strives to bring misc, individual taxes under one bracket! Being a completely new tax, it introduces the concept of ‘place of supply’ and several relevant tax structures, confusing the tax-payers, especially in some instances.
For instance, if you are a seller of a product in Delhi and are selling it to a buyer in Mumbai, and you sell it via Pune, it becomes an inter-state sale. Even though your product will end up in the same state, there will be additional taxes. The tax calculations under such a circumstance would be confusing, and taxpayers can end up paying the wrong GST amount.
So what happens when you end up paying the wrong GST amount? Would you be fined under such a circumstance? If not, what is the law? Let’s find out in this blog!
What Happens When You Pay A Wrong GST Amount?
Relax, there are chances where you might have paid the wrong GST amount! There are provisions where you can efficiently address such scenarios by claiming a similar input the next time when you pay GST. However, the rules stand different when you miss out on tax payments. This process is a bit different when compared to the normal GST refund process.
These refunds around the wrong or mistaken tax calculations are provided separately, allowing the payers to reclaim their taxes paid the previous time wrongly. In such a scenario, the total GST Bill needs to be brought explicitly under a new clause that mentions that interest will not be applicable if the correct tax is paid later.
Businesses, especially the small enterprises that operate on fewer resources, are prone to make mistakes while collecting GST on the initial days. Charging interest on tax payments that are mistaken can be harsh since the officials consider it to be a genuine effort to evade tax.
What happens when you miss out on paying your GST dues on time?
As per the GST Penalty regulations, taxpayers will be charged an 18% interest per annum when they fail to pay their tax dues on time. However, your interest amount will only be levied post the due date.
Now, let’s check the different instances of paying GST and how it should be treated.
When You Treat An Interstate Sale As Intrastate Sale
If the person taxable has paid CGST/SGST on an intra-state transaction, instead of an inter-state supply transaction, they need to collect IGST instead of Central of State GST. In this case, the taxpayer needs to pay IGST to receive their refund on the amount paid as CGST/SGST.
What happens when the collected tax isn’t deposited? Is there going to be a penalty?
Yes, there are going to be no charges implied to the collected tax. While there are no severe implications under wrong tax deposits, GST becomes strict when provisions for uncollected taxes after collection. Any person collecting the tax amount is entitled to deposit it to the State or Central government. This becomes applicable regardless of whether the overall supply is taxable or not.
It needs to be noted that no individual can escape the law, especially under the taxation section. Therefore, if you are a taxpayer, you cannot first collect GST and claim it later as their goods/services were exempted when they did not pay the tax to the authorities. When it comes to late fines and fees, the implications are applicable, irrespective of orders from the court.
Now You Know!
Now we know that the GST law keeps strict provisions around evasion for the tax that align with the government’s stand on tax evasion. However, it should also be noted that tax evasions are considered strict under the eyes of the law. Therefore, try not to skip out on any of the payments and submit on due time.