GST
Reduced penalty under Section 74
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Facts
Sec 74 lets the penalty drop if you pay early: 15 percent of tax if paid before the notice, 25 percent within 30 days of the notice, 50 percent within 30 days of the order. Otherwise it equals the tax.
Provisions and law
- Sec 74, CGST Act 2017Demand where fraud, wilful misstatement or suppression is alleged, for periods up to FY 2023-24
Analysis
On ₹10 lakh tax, paying with interest and ₹2.5 lakh penalty within 30 days closes the case, against ₹10 lakh penalty later. Paying means accepting the facts, so do this only if the demand is right. If you dispute fraud, contest it.
Conclusion
- Check whether the facts support the demand.
- If accepting, compute tax, interest and 25 percent penalty.
- Pay through DRC-03 within 30 days.
- Inform the officer and ask for closure in DRC-05.
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