Chartered Accountant · ICAI M.No. 153926 · FRN 136869W
Non-fraud vs fraud
For a genuine short-payment or error (no fraud), the penalty is broadly 10% of the tax or ₹10,000, whichever is higher. Where there is fraud, wilful misstatement or suppression, it jumps to 100% of the tax. Paying the tax and interest before a notice can reduce or avoid the penalty.
Other penalties and fees
A general penalty of up to ₹25,000 applies to breaches without a specific penalty. Added to these are late fees for delayed returns and interest (18% a year) on unpaid tax. Specific offences — like issuing fake invoices or moving goods without an e-way bill — carry their own penalties. Confirm the current provisions for a specific offence.
A worked example
Example: a business that under-paid ₹1 lakh of tax by genuine error faces about ₹10,000 penalty plus interest — reduced further if it pays on its own before a notice. A business caught with fake invoices faces a 100% penalty and possible prosecution. Voluntary, prompt correction is always the cheaper path. Our team can quantify exposure and help regularise it.