Late fees and penalties for non-compliance in GSTR-7

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As a taxpayer, it’s essential to understand the consequences of not adhering to the GST rules and regulations. In this article, we will explore the various charges that can be imposed on taxpayers who fail to file their GSTR-7 returns on time or do not comply with the requirements. We will also discuss how these penalties can impact businesses and the steps that can be taken to avoid them. Stay tuned to learn more about the late fees and penalties associated with non-compliance in GSTR-7 and protect yourself from any potential financial setbacks.

Meaning of GSTR-7 Form

GSTR-7 is a monthly return form encompassing TDS deductions, TDS payable, TDS liability paid or expected, and TDS refunds claimed under Section 54 of the CGST Act, 2017. Entities mandated to deduct TDS under Section 51 of the CGST Act 2017 comprise government departments, agencies, local authorities, and specific individuals or groups as designated by the GST council.

Understanding TDS under GST

As per the Central GST (CGST) Act, entities falling under the notification must deduct TDS at 1% on payments exceeding Rs 2.5 lakh for the supply of goods or services. Furthermore, states can levy an additional 1% TDS under their laws.

In the e-commerce sector, companies must collect a TCS of up to 1% when paying suppliers in compliance with the Goods and Services Tax (GST). Similarly, states can impose an additional TCS of up to 1% under their State GST (SGST) laws.

GST Deductees under GSTR-7

  • Departments or establishments of the Central Government or State Government.
  • Local authorities.
  • Governmental agencies.
  • Persons or categories of persons as notified by the Government.

In addition to the above, the following entities are also required to deduct TDS:

  • Authorities, boards, or bodies established by Parliament or a State Legislature, with 51% equity (control) owned by the government.
  • Societies founded by any Central or State Government or a Local Authority are registered under the Societies Registration Act 1860.
  • Public sector undertakings.

Also Read: Filing frequency and due dates for GSTR-7

Due Date for filing GST 

A taxpayer must submit their GSTR 7 for the current month by the 10th day of the following month. The GSTR-7 for September should be filed by 10 October. A TDS certificate, GSTR 7A, must be issued within five days of transferring the tax payment to the government.

Requirements for Filing GSTR 7 

  • Register as a Tax Deductor and possess a valid/active GSTIN.
  • A valid User ID and password for GST portal access.
  • Maintain an active, non-expired, or non-revoked digital signature (DSC) if filing the return through DSC.
  • Ensure payment has been made or the amount has been credited to the supplier’s account.

To know about late fees and penalties for non-compliance in other GST Forms, follow the link: Penalties and Late Fee.

Penalty for Non-Compliance in GSTR 7 

Failure to Deduct TDS

Failure to deduct TDS will result in an interest charge of 18%, which will be levied along with the TDS. The amount will be determined and recovered under legal provisions if TDS is not deducted.

Penalty for Issuing TDS Certificate Beyond 5 Days:

If the TDS certificate is issued more than five days late, a late fee of Rs. One hundred per day will be imposed, with a maximum limit of Rs. 5000 for each applicable Act.

TDS deducted but not paid

When TDS is deducted but not remitted to the government or paid after the 10th of the following month, interest at a rate of 18% is applicable, starting from the day following the return filing deadline and continuing until the actual payment date. Failure to comply will result in the amount being determined and recovered under legal provisions.

Late filing of TDS returns

A late fee of Rs.100 per day of delay will be imposed, with a maximum cap of Rs.5000 under each Act.

Conclusion

GSTR-7 is a critical document for businesses and individuals, as it provides detailed information regarding taxes paid and identifies potential problems and risks associated with GST compliance. Many issues can impact your business or financial stability, from deducting TDS, collecting TCS, and filing late returns.

The consequences of non-compliance can also include fines and penalties and the potential of being denied access to financial services. The penalties for not adhering to the GST rules and regulations can severely impact businesses and their employees. It is critical to understand these penalties and how to avoid them.

It’s essential to familiarise yourself with the various penalties to ensure you understand these potential risks and how they can negatively affect your business and your financial security that can be imposed on businesses and taxpayers who fail to adhere to the GST rules and regulations. 

Related Read: Applicability and registration requirements for GSTR-7

Frequently Asked Questions(FAQs)

  • Is There an Interest Charge for Delayed GSTR-7 Filing? 

In addition to the late fee, an 18% per annum interest charge is applicable.

  • What If Errors Are Made in the GSTR-7 Filing?

You can enter the original and revised details in this section to correct any information from a prior tax period’s return.

  • What Happens If GSTR-7  is not filed? 

Failure to file GSTR-7 can lead to late fees and interest charges and could affect the deductee’s eligibility to claim input credit.

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CaptainBiz

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This Post Has 2 Comments

  1. ROHIT JAIN

    A) 2 departments deducted TDS on GST in my firm but 1 deposited other 2nd one not deposited .Can i file TDS return to receive TDS of 1. if yes what will happen if 2nd one deposited late can i claim the same.
    B) In which month the TDS will show in our account. Like GSTR7 return period was Aug-23 but filed in Nov-23, TDS will show in deductee account in Aug-23 or Nov-23.

    1. CaptainBiz

      Answer 1. As per TDS regulations, a department from which damages or fees have been collected under GST should deposit the amount of TDS along with the GST dues paid to the government. If you believe that two of your company’s departments have deposited their TDS on time, it is still important to file a TDS return to claim the refund for the department that has not deposited their TDS on time. If the second department deposits their TDS late, it will still be included in the total refund you can claim. However, it’s always a good idea to file a return to ensure that you are following all the rules and regulations.

      Answer 2.
      If the GSTR-7 return for August 2023 was filed in November 2023, the TDS should show in the deductee’s account around November 2023, after the return is processed. The exact timing can vary based on the processing times of the tax authorities. The details will reflect in the deductee’s Form 26AS, which is accessible on the Income Tax Department’s website.