CHANGE IN TIME LIMITATIONS AND PENALTY UNDER GST 

ByRakesh Sharma

SECTION 73,  SECTION 74 & NEW SECTION 74A

The CBIC vide  Notification No. 17/2024-Central Tax dated September 27th, 2024 notified the provisions of sections 118, 142, 148 and 150 of the Finance (No. 2) Act, 2024, to be applicable from 1st November, 2024.   Among other important changes a significant change was made in section 73 & 74 of CGST Act, 2017. A new section 74A was inserted by superseding the section 73 & 74 of CGST Act, 2017.  The Section 74A was made applicable from financial Year 2024-25 onwards.

The effect of new section  

Key Point  Section 74ASection 73Section 74
ApplicabilityF.Y. 2024-25 OnwardsUpto F.Y. 2023-24Upto F.Y. 2023-24
Event for issuance of Notice Tax Not Paid or Short Paid, Erroneous Refund, ITC Wrongly Availed or Utilised.Tax Not Paid or Short Paid, Erroneously Refunded, ITC Wrongly Availed or UtilisedTax Not Paid or Short Paid, Erroneously Refunded, ITC Wrongly Availed or Utilised by the reason of fraud or any wilful-misstatement or suppression of facts to evade tax,
Time Limit for Notice  within 42 months from the due date for furnishing of annual return 3 months before the expiry of 3 years6 months before the expiry of 5 years
Time Limit for OrderWithin 12 months from the issuance of the notice3 Years 5 years 
Penalty   
(Non-Fraud)  




(Fraud Cases)

10% of the tax due or ₹10,000, whichever is higher   

100% of tax dues.
10% of the tax due or ₹10,000, whichever is higher 		100% of the tax due.
Penalty- If Tax + Interest paid BEFORE SCN
(Non-Fraud)  

(Fraud Cases)  


Nil  

15%

Nil   ——		  15%   ———
Penalty- If Tax +Interest paid After  SCN
(Non-Fraud)


(Fraud Cases) 






Nil 
If paid within 60 days from SCN



25% 
If paid within 60 days from SCN  

50%
If paid within 60 days from the communication of Order. 		Nil 
If paid within 30 days from SCN		  25% 
If paid in 30 Days




50%
 After  30 days

KEY DINSTINCTIONS (Before & After Amendment)

  • No separate limitation for fraud cases. Common time period of 42 months further extendable by six months has been provided in all cases.
  • Time period has been extended up to One Year for passing of the order from the date of SCN.
  • Earlier payment of tax and interest will attract lesser penalty. Even, in fraud cases minimum penalty of 15% has been provided if the amount in question has been deposited before SCN along with interest. The penalty of 50% has been provided in case the tax and interest is deposited with 60 days from passing of order. 
  • Overriding effect on all relaxations in penalty has been provided in cases where any amount of self-assessed tax or any amount collected as tax has not been paid within a period of thirty days from the due date of payment of such tax. The resultant effect would be application of 10% of penalty even in non-fraud cases 

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