The GST system includes notions such as ‘place of supply’ and a new tax structure. Products and services are taxed at the state level. Some people may be confused by this.
Mumbai (Maharashtra) vendor sells to Delhi buyer. Pune (Maharashtra) is the next stop for the products after Delhi. Despite being an interstate transaction, the items are delivered to Maharashtra. Calculating taxes can be confusing as a result. Some taxpayers may pay the wrong GST. The GST laws specifically address this.
What’s wrong with GST? Does it have a penalty?
It is illegal for tax evaders to intentionally misrepresent their income through false claims and omissions.
Different scenarios result in different taxes and penalties.
Interstate sales classified as interstate
CGST/SGST must be paid by someone who misunderstands a state-to-state supply as an intrastate one. IGST should have been collected instead of CGST and SGST. IGST must be paid, and CGST and SGST refunded.
Interstate sales are classified as such
Incorrectly charged IGST on intrastate supplies. The GST/SGST must be collected. GST/SGST must be paid, IGST refunded.
If the tax is paid later, no interest will be due. Penalties will not apply.
There is a different GST refund process for incorrect or faulty tax calculations. The GST Bill eliminates interest if the correct tax is paid later.
Undeposited taxes are taxes that have been collected but not deposited
After GST is collected, there are strict penalties for not depositing it. A person who collects GST must pay it to the central government or the state government. Taxability is not relevant.
Thus, a taxpayer cannot collect GST and claim it is exempt, so no tax is due. Taxes cannot be refunded. Taxes can’t be refunded. A cause notice will be mailed. Taxpayers can request a hearing in writing.
GST law is very clear in this regard. Taxes paid in error will not be penalized.
The GST does not penalize unintentional mistakes. If you file a return and pay more tax than you intended, you can adjust your tax payment.
Punishing someone for making a mistake is against the law. To learn more about GST, contact your Chartered Accountant.