Penalties Section 73 CGST — Non-Fraud Tax Demand (Interest + 10% Penalty)
Section 73 CGST — Non-Fraud Tax Demand (Interest + 10% Penalty)
CGST Act 2017 — 73
Where tax is short-paid / not paid / erroneously refunded / ITC wrongly availed WITHOUT fraud: tax + 18% interest u/s 50 + 10% penalty (min ₹10,000).
The Penalty
10% of tax OR ₹10,000, whichever higher
- Cap
- None stated on penalty; SCN time-limit is 2 years 9 months from due date of annual return
- Calculation base
- Tax short-paid / erroneously refunded / wrongly-availed ITC
- Period
- Interest until payment; penalty is one-time.
When does this apply?
Tax default without fraud, wilful misstatement, or suppression of facts.
Calculate this amount
This estimate applies only the rate and caps published in the authored rule for this page.
₹0₹1,00,000 × 0% tax × 10%
Worked examples
| Scenario | Calculation | Result |
|---|---|---|
| Tax short-paid ₹2,00,000 without fraud | Penalty = 10% × ₹2 lakh = ₹20,000; add s.50 interest | ₹20,000 |
| Tax paid before SCN with interest | No penalty if paid pre-SCN (s.73(5)) | ₹0 |
| Tax paid within 30 days of SCN | No penalty (s.73(8)) | ₹0 |
How it is levied
Proper officer issues SCN; order under s.73(9). Voluntary payment pre-SCN (s.73(5)) or within 30 days of SCN (s.73(8)) closes proceedings without penalty.
⚠ VERIFY
Confirm the SCN was issued within the prescribed 2y9m window; if s.74 is invoked instead, penalty jumps to 100%.