Under the Income-tax Act, penalties are levied for various defaults committed by the taxpayer. Some of the penalties are mandatory and a few are at the discretion of the tax authorities. In this part, you can gain knowledge about the provisions relating to various penalties leviable under the Income-tax Act.
As per the Union List in the Constitution of India, the Central Government has the power to levy a tax on any income other than agricultural income, which is defined in Section 10(1) of the Income Tax Act, 1961, which is the charging statute of income tax in India. Income tax is the annual tax levies on the income of businesses and individuals, wherein businessmen and other individuals are required to file their income returns to the central government every year to determine the amount of tax they owe to the government. It is the key source of funding available to the government. As per the Income Tax laws in India, income tax is imposed by the government on,
- Hindu United Families (HUF)
- Companies and firms
- Limited Liability Partnership (LLP)
- Association of persons, a body of individuals
- Local authority and any other artificial juridical person
Tax evasion in India is a serious affair and for any defaulters or fraudsters, the Income-Tax act provides for adequate repercussions.
- Not Filing Income Tax Returns
- Failure to Pay Tax as Self-Assessment
- Failure to Comply with Demand Notice
- Failure to Get Accounts Audited
- Concealment of Income
- Failure to comply with Income Tax notice
The Income Tax Act exists to ensure tax defaulters and offenders are brought to light. Do not join this list, pay the correct tax on time.
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- In order to ease the compliance burden of SME Sectors, following amendments has been recommended:
- Composition Scheme will be available up to the turnover of Rs. 1 Crore. Tax Rate for Composition Scheme will remain same at present level.
- Person with a turnover up to 1.5 Crore will be required to furnish the quarterly return instead of monthly return. Tax will also be required to be paid on Quarterly basis. Switchover will take place from 1st October.
- Returns from July to September’ 2017 will still be required to be filed on monthly basis.
- Big Tax Payers filing monthly basis who are purchasing goods from small tax payers will require to avail credit through their GSTR 2 by filing manual feeding.
- E-way bill will be tried to notify upto 1st April, 2018 nation wide.
- Applicability of Reverse Charge on Inward Supply from unregistered person is deferred will 31st March 2018.
- TDS & TCS Provisions will be effective from 1st April 2018.
- Service Provider with a turnover of upto 20 Lakh will be exempted with applicability of GST on their Inter-State supply.
- Refund to exporters will be granted with effect from 10th October for the month of July and with effect from 18th October for the month of August.
- Future exports can be made by the merchant exporter at nominal rate of 0.1% IGST up to 31st March. Preferably by 1st April, 2018, E-wallets system will be developed for exporters.
- Issues with respect to allowing composition taxpayers to make inter-state outward supply, to pay composition tax only on taxable items will be studied by group of ministers (GOM) on urgent basis.
- Now suppliers having upto 20 lacs interstate supplies shall not be require to have mandatory registration .
- Tax Rates of around 27 items has been revisited by fit-ment committee. Changes rates for some items are as follows:
- From 12 to 5: Unbranded namkeen, Unbranded ayurvedic medicines, Paper Waste,
- From 18 to 5: Plastic Waste, Rubber Waste,
- From 28 to 18: Parts of Diesel Engine, Stationary items, Stones used for flouring except marble and stone
- From 18 to 12: Man-made Yarn
- Many Items of Job Work for example printing items are reduced to 5% from 12%.
- Rates for government construction contracts in several case where labour component is more such as irrigation projects are reduced to 5% from 12%.
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Goods and Service Tax is an ambitious tax regime applicable from 1st of July 2017 made a number of indirect taxes subsumed into it. The government has now revealed the due dates for the payment of GST. The GST payment due date for general taxpayers is 20th of October.
All the registered taxpayers are required to make the payment of their taxes on GST Portal latest by the 20th of this october for a particular tax period. Taxpayers registered under composition scheme will have to pay GST only once every quarter.
GST Payment Due Date
- GST Payment due date (normal taxpayer): 20 days from the end of the tax period month.
- GST Payment due date (composition scheme taxpayer): 18 days from the end of a tax quarter.
Interest Applicable on GST Late Payment
Interest at the rate of 18% per annum will be applicable for GST late payment. In case it is determined that the taxpayer misstated output tax liability in the GST return, then interest at the rate of 24% would be applicable. In addition to the interest, penalty could also be levied on the taxpayer under GST for erroneous return filing, wilful misstatement or fraud.
Rules and Regulations of GST Payment for Taxpayers
- The electronic cash ledger will be credited if payment for tax, interest, penalty and fee has been made by internet banking, credit card, NEFT, RTGS. While the amount can be used for the payment of interest, tax, penalty which is remaining in the electronic cash ledger of the taxpayer.
- A payment for GST PMT-06 form is done through challan while the challan is only valid for the time period of 15 days. When the payment is done successfully, a Challan Identification Number (CIN) is generated. If in any case the CIN is not generated than the taxpayer can file Form GST PMT-07.
- Online payments even made after 8 pm will be credited on the same day to the taxpayer’s account. While there will be no physical challan accepted for the GST payment while the challans will be generated from the gst.gov.in only for all the payments of taxes, fees, penalty, interest.
- For the payment of challan under the 10000 rupees limit, it can be done over the counter with cash, cheques, demand draft through authorised banks while for the payments exceeding the amount of 10000 will be collected through digital mode only
Interest and Penalty on late payment of GST
A person is liable to pay interest/penalty as per following conditions and rules.
- Any payment after the due date will attract an interest at the rate of 18%.
- If a person makes excess or undue claims of input credits or excess/undue reduction in tax liability, they will have to pay an interest at the rate of 24% on the excess claim or reduction amount.
- The penalty of 10% of the unpaid or short paid tax or Rs. 10,000, whichever is higher, is to be levied in case of non-payment of GST even after 3 months from the originally scheduled date.
- In case of a fraud or misstatement to escape tax, the penalty of Rs. 10,000 or 100% of the tax will be applicable.
Hence, it is imperative for you as a tax payer, to avoid instances of interest payment. Default in payment of tax will also have an impact on your compliance rating. Timely and accurate compliance will help you to avoid unnecessary cash outflow and achieve a good compliance score.
For assistance with GST return filing or Making GST payments, get in touch with an GST Advisor