One of the many reasons behind the implementation of the GST Model Law is to prevent tax evasion and make the system more transparent. Thus, the government will take stringent measures against those who will be found non-compliant with the set regulations. 

To better prepare against non-compliance, the center is also establishing several departments that will handle business intelligence, analytics, etc. The current tax department will also be bolstered in according to the new GST regime. Thus, if you are liable to register for GST then you must absolutely get your business registered if you don’t want to face any kind of legal action.

Penalties Under GST 

You are liable to pay a fine up to Rs. 10,000 or more if you have been found guilty of any of the following:

  • Obtaining tax refunds through fraudulent ways.
  • Supplying goods and/or services without releasing invoices.
  • Releasing invoices without supplying the goods and/or services.
  • Providing false registration information, invoices, etc.
  • Not paying the tax collected within 3 months.
  • Forging financial details such as profits and supply of goods, etc.
  • Misrepresenting annual turnover with an intent of tax evasion.

Although the penalties imposed under the GST regime are stringent themselves, a taxpayer may also need to do a jail time under some serious offenses. These are discussed below.

Imprisonment Under GST

The following are some of the conditions that can actually cause imprisonment:

  1. If a taxpayer is found to be tampering with evidence or obstructing any officer in carrying out their duties, or withholding any information that’s required from them as per the law then they can face imprisonment of 6 months with fine.
  2. If a taxpayer is found guilty of tax evasion or wrongly availing the Input Tax Credit then they can face imprisonment and a fine according to the following structure.


  • Imprisonment up to 1 year with fine if the amount of tax evaded or wrongly claimed ITC lies between Rs. 50 lakhs and Rs. 1 crores.
  • Non-bailable imprisonment up to 3 years with fine if the amount of tax evaded or wrongly claimed ITC lies between Rs. 100 lakhs and Rs. 2.5 crores.
  • Non-bailable imprisonment up to 5 years with fine if the amount of tax evaded or wrongly claimed ITC is more than 2.5 crores.

To ensure that a proper flow is maintained in the GST system the government has also decided to charge late fees. So, for every single day that has passed since the due date for furnishing details of inward or outward supplies, a taxpayer will need to pay Rs. 100 with the maximum total amount being Rs. 5,000. Similarly, Rs. 100 will be charged for each day that is passed after the due date for furnishing the annual return with the maximum total limited to 25% of the taxpayer’s annual turnover.


GST is one of the biggest government’s moves to tackle tax evasion and corruption in the country. Thus, you must ensure you are compliant with the set standards and regulations. Besides, by doing so you and your customers will both be benefited by saving money and contributing towards the betterment of the country.

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