Timely filing of the GSTR-9 annual return is crucial to avoid penalties and maintain compliance under the GST regime. Missing the deadline can result in significant financial penalties and other complications. Here’s an in-depth look at the penalties associated with late filing and how to mitigate them.

1. Late Fee for Delayed Filing

If the GSTR-9 is not filed by the due date, the taxpayer is liable to pay a late fee under both the Central GST (CGST) and State GST (SGST) components.

Penalty Structure:

• CGST: INR 100 per day of delay.
• SGST: INR 100 per day of delay.
• Total: INR 200 per day of delay.
• Maximum late fee: 0.25% of the taxpayer’s turnover in the relevant state or union territory.

Example: If a business with an annual turnover of INR 1 crore delays filing by 10 days, the late fee would be INR 2,000 (INR 100 x 10 days x 2).

2. No Late Fee Under IGST

There is no separate late fee under the Integrated GST (IGST) Act. However, the combined CGST and SGST late fee applies.

3. Interest on Delayed Tax Payment

If there is any tax liability outstanding, an interest of 18% per annum is levied on the unpaid amount from the due date until payment.

Example: If INR 10,000 is due in tax and paid 30 days late, the interest would be approximately INR 150 (10,000 x 18% / 365 x 30).

4. Risk of Notices and Scrutiny

Continuous non-compliance can trigger notices from the GST department, increasing the risk of audits and penalties.

5. Impact on ITC Claims

Delayed filing can lead to restrictions on claiming Input Tax Credit (ITC), affecting cash flow and increasing tax liability.

6. How to Avoid Late Filing Penalties

• Set Reminders: Ensure timely filing by setting calendar reminders for due dates.
• Regular Reconciliation: Reconcile GSTR-1, GSTR-3B, and GSTR-9 periodically.
• Professional Assistance: Engage tax consultants like My Jama Kharch for accurate and timely filing.

Conclusion

Late filing of GSTR-9 not only incurs financial penalties but also increases compliance risks. Staying organized, maintaining accurate records, and seeking professional guidance can help businesses avoid such penalties and ensure smooth GST compliance.