Service Tax Penalties in India

Last Updated at: Oct 30, 2020
To clean up pendency in return filing, the 40th GST Council meeting held recently has reduced/waived late fee for non-furnishing FORM GSTR-3B for the tax period from July 2017 to January 2020. There will be no late fee/penalty if there is no tax liability. The maximum late fee has been capped at Rs 500/per return if there is any tax liability. The reduced rate of the late fee would apply for all the GSTR-3B returns furnished between 1.7.2020 to 30.9.2020. 


In her budget speech for the FY 2020-21, the Finance Minister has announced the introduction of a simplified GST return format with effect from 1st April. It will help SMEs and VAT & Service Tax holders, among others to transit smoothly through the taxation system. 


The central government has laid down provisions under sections 76, 77 and 78 of the Finance Act, 1994 indicating penalties to be paid:

Failure to file returns: The due date for returns filing is April and October 25th every year. A penalty of up to Rs. 2000 will need to be paid in case of delay.

Failure to furnish information: A Central Excise Officer may ask for certain information from time to time. Failure to furnish such information may result in penalty of Rs. 200 per day or Rs. 5000, whichever is higher.

Register your service tax

Failure to register: If, as a service provider, you fail to register yourself despite achieving Rs. 9 lakh in revenue in a financial year, you are liable to pay Rs. 5000 as penalty.

Failure to maintain records: If you fail to keep the challans and other documents required while filing returns, a fine of up to Rs. 5000 would apply.

Failure to pay electronically: If you file returns of more than Rs. 1 lakh in a financial year, you must make payment of service tax electronically. If you do not, it would result in a fine of Rs. 5000.

In case you are fined, but believe you have sufficient evidence to overturn the penalty, you may do so by appealing the fine.