What if you collect IGST rather than CGST and SGST? For more information on the penalty for paying the incorrect GST, read on.
GST is a completely new tax, with new notions like ‘place of supply’ and tax structures. GST is a consumption-based tax that applies in the state where the products or services are consumed. This can be confusing, especially in specific situations. Let’s see how to deal with the wrong gst paid by mistake.
For example, a vendor in Mumbai (Maharashtra) is selling to a buyer in Delhi. The buyer in Delhi instructs the seller to deliver the products to Pune (Maharashtra). Even if the items are delivered to the same state, Maharashtra, this is an inter-state transaction. However, this can be perplexing, and the tax calculation might be subject to inaccuracies. Taxpayers can end up paying the wrong GST. As a result, the GST Registration Process includes specific clauses to address these situations.
Will You Be Penalized for Paying Wrong GST?
Taxpayers who knowingly misrepresent their taxable income, as well as those who evade tax by making false claims or omissions, face penalties.
Listed are the taxes applicable in different scenarios and the penalty that might be levied if a wrong calculation is made.
When an Interstate Sale Is Mistakenly Classified as an Intrastate Sale
Consider the situation of a taxable person who pays CGST/SGST on an interstate supply transaction that he mistook for an intrastate supply. i.e., instead of CGST/SGST, he should have collected IGST. In this instance, the person in question must pay IGST and receive a refund of the CGST/SGST sum paid.
When an Intrastate Sale is Mistakenly Classified as an Interstate Sale
This scenario occurs when a taxable person pays IGST on an intra-state supply transaction that they mistook for an inter-state supply. In an intra-state supply, the tax collected should ideally be CGST/SGST rather than IGST. To rectify the problem, the person concerned must pay CGST/SGST and receive a refund of the IGST paid.
Note: If the taxpayer pays the right tax later, no interest will be due. In these cases, the penalty will not be applied.
These refunds for incorrect or faulty tax calculations that are done using a salary tax calculator will be sent separately in order to pay back the tax that was mistakenly paid. The process is different from the standard GST refund process. In the GST Bill, a new clause clearly states that interest will not be charged if the right tax is paid later.
Our GST interest calculator makes calculating GST interest easy. Use it online anytime!
When Tax is Collected But Not Deposited With the Centre or States
While the law is tolerant when it comes to incorrect tax deposits, the GST has strict penalties for taxes that are not deposited after they have been collected. GST online must be paid with the centre or the state government by everyone who collects it. Regardless of whether the supply (on which the GST was collected) is taxable or not, this rule applies.
As a result, a taxpayer cannot collect GST and then claim that their goods/services were exempt, resulting in the tax not being paid with the appropriate authorities. Under any law, including the GST law, no one can benefit from compensation. In this situation, the penalty will apply regardless of any order from a tribunal or court. A show-cause notice will be issued by the competent officer. There will be an option for a personal hearing, if the taxpayer requests for it in writing.
Conclusion
The GST law is very clear in this regard. If you have mistakenly paid the wrong GST by mistake, then you are not penalized.
If you have mistakenly paid the wrong GST mistake and it was not intentional, then you are not penalized for it. If you make a mistake in paying one of these taxes, you can adjust by filing your return or paying more tax to the government.
This is because the law doesn’t allow for a penalty to be imposed on a person who has made a genuine mistake. You can contact your personal Chartered Accountant to know more about GST: https://www.gst.gov.in/ and guidelines.
