Levy of Late Fee – Section 47 of GST

The GST regime mandates timely compliance by registered taxpayers. One such compliance requirement is the timely filing of GST returns. Failure to do so attracts penalties, including late fees. Section 47 of the CGST Act, 2017, specifically deals with the levy of late fees for delayed filing of GST returns. This article provides an in-depth understanding of Section 47, its applicability, late fee structure, and key considerations for businesses.

Understanding Section 47 of the CGST Act

Section 47 of the CGST Act prescribes penalties in the form of late fees for taxpayers who fail to furnish their GST returns within the stipulated time. This late fee is levied on a daily basis and is subject to a maximum limit.

Late Fee Structure Under Section 47

The section lays down the following provisions:

1. Failure to file outward supply details or GST returns (Section 37, 39, or 45, and Section 52)

   • If a registered person fails to furnish the details of outward supplies (under Section 37) or GST returns (under Section 39 or Section 45), they are liable to pay a late fee of ₹100 per day for each day of default.

   • The maximum late fee for such non-compliance is ₹5,000.

2. Failure to file an annual return (Section 44)

   • If a registered taxpayer does not submit the annual return (under Section 44) within the due date, they must pay a late fee of ₹100 per day.

   • The maximum late fee in this case is calculated at 0.25% of the taxpayer’s turnover in the respective State or Union Territory.

It is important to note that these late fees are charged under both CGST and SGST/UTGST laws separately, effectively doubling the penalty.

Key Updates and Amendments

• Omission of certain provisions: As per Notification No. 18/2022 – CT dated 28.09.2022, some clauses related to late fees under Section 37 have been omitted, effective from October 1, 2022.

• Insertion of Section 52 compliance: The same notification also introduced an amendment making Section 52 (Tax Collection at Source) applicable under this provision.

Implications for Businesses

• Compliance is Crucial: To avoid unnecessary financial burdens, businesses must ensure timely filing of GST returns.

• Interest in Addition to Late Fees: Besides late fees, interest at 18% per annum is also applicable on delayed tax payments.

• GST Portal Auto-Calculations: The GST portal automatically calculates and imposes late fees while filing returns, preventing taxpayers from avoiding the penalty.

How to Avoid Late Fees?

• Maintain a Compliance Calendar: Track GST return due dates to avoid missing deadlines.

• Enable Auto-Filing Reminders: Utilize ERP or accounting software to set up automatic reminders for return filings.

• Timely Reconciliation: Regularly reconcile GST data to ensure smooth filing without errors.

Conclusion

Section 47 of the CGST Act underscores the importance of timely compliance with GST return filing. While late fees may appear nominal, consistent delays can result in hefty penalties. Businesses should implement robust tax compliance strategies to avoid unnecessary penalties and ensure seamless GST compliance.

By staying updated with GST provisions and amendments, taxpayers can mitigate risks and enhance operational efficiency in their financial compliance. Ensure timely GST return filings to avoid late fees and stay compliant with the law!