According to a June 2019 survey, only 7.8 million businesses out of the 12.2 million GST registered enterprises, filed their returns. Failure to file taxes can lead to immense penalties. To understand the complete consequence of late or no Goods and Services Tax payments, read on.
GST: What is it?
GST or Goods and Services Tax refer to a consolidated taxation regime, which replaces several indirect taxes. The consolidation has increased convenience for taxpayers, ensuring that they do not need to bear separate central and state tax burdens.
Generally, businesses with an annual turnover of Rs.40 lakh or above are eligible to pay GST. This limit is Rs.20 lakh for enterprises located on hilly regions and north-eastern states. However, some businesses need to pay GST irrespective of their earnings.
A company registered under GST becomes legally eligible to collect taxes from its consumers. Still, even with the several advantages of GST, several entities are actively avoiding to pay their liabilities. Doing so leads to severe consequences.
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Now that you know what is GST, assess what are the adverse effects of delaying your payments for too long.
What are the effects of late GST filing?
After a business registers for GST online and receives the GSTIN, it has to file returns even if there has been zero purchase or sale. If the company fails to clear GST payments on time, certain penalties are levied due to the late transaction.
- A business failing to provide the information regarding inward and outward supplies, final return, monthly return and other relevant data on time must pay a penalty of Rs.100 for every day of delay. The maximum penalty under this rule is Rs.5,000.
- A business that fails to provide annual return data within a specified date is also liable to pay Rs.100 per day as fine for each extra day of delay. The upper limit for this fine is 25% of the company’s annual turnover in the state of GST registration.
When it comes to knowing all about GST, one should understand that failure to pay the Goods and Service Tax can lead to cancellation of GST registration.
Circumstances under which GST registration can be cancelled
Entities that are eligible for registration cancellation are –
- A dealer or supplier who has failed to file returns for 6 subsequent months.
- Any composition dealer who has failed to submit returns for 3 successive quarters.
- Any individual who has opted for GST, but has failed to initiate a business within 6 months of availing the registration.
- Any registration that resulted from misstatement, fraud or fact suppression.
Benefits of GST payments
Not only is GST mandatory, but it is also beneficial for businesses in more ways than one. The following pointers indicate how Goods and Services Tax can help your business grow.
- GST consolidates the various indirect taxes under one umbrella, making it simpler for businesses to keep track of their tax liabilities.
- Introduction of new GST rates in India benefitted small scale businesses drastically. Previously, companies earning profits of more than Rs.5 lakh per year were liable to pay VAT. GST liability is limited to enterprises that post an annual turnover of more than Rs.40 lakh.
- The hassle-free online payment procedure is another way in which GST has impacted businesses. It has made tax payments easier and more convenient, reducing paperwork drastically.
Regular GST payment ensures that a business is liable to avail a range of benefits, including business loans from reputed financial institutions. Companies, such as Bajaj Finserv offer hassle-free financing options to businesses in need.
It also provides pre-approved offers to simplify the loan availing and approval process. These offers are available on a range of credits, including professional loans, personal loans, credit cards and more.
As a business owner, you should know how to file GST returns for hassle-free tax payments. Doing so would reduce legal hassle while also allowing you to maintain your turnover without any fines or penalties.