Karnataka vat interest and penalty

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srinivas Ganesh Shet (Querist)
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23 July 2012 namaste all,
please clarify regarding interest and penalty payable in delayed KVAT payment and non filing of return.

if paid and filed return before 5 days after due date
if paid and filed return after 5 days and before 10 days of due date
if paid and filed return after 10 days of due date

RENGARAJ R.K

RENGARAJ R.K (Expert)
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23 July 2012 36. Interest in case of failure to furnish returns or to pay tax
declared on returns or other amounts payable.- (1) Every dealer shall be
liable to pay simple interest on any amount of tax which should have been
declared on a return, but which has been omitted from it, unless that
omission is corrected within three months of the omission subject to subsection (2) of Section 72, and such interest is payable from the date the tax
should have been declared, and the dealer shall declare his liability to pay
that interest in such form and manner as may be prescribed.
(2) If a dealer required to furnish a return under this Act.-
(a) fails to pay any amount of tax or additional tax declared on the
return, or
(b) furnishes a revised return more than three months after tax
became payable, declaring additional tax, but fails to pay any
interest declared to be payable under sub-section (1), or
(c) fails to declare any tax or interest which should have been
declared, or
(d) fails to make a return,
such dealer shall be liable to pay interest in respect of the tax and additional
tax payable as declared by him or the tax payable and interest payable
under sub-section (1) for the period for which he has failed to furnish a
return.
(3) Where any other amount is payable under this Act is not paid
within the period specified in Section 42, interest shall be payable on such
amount from such period.
(4) The interest shall also be payable under this Section during any
period during which recovery of any tax or other amount payable under the
Act is stayed by an order of any authority or Court in any appeal or other
proceedings disputing such tax or amount.
37. Rate of interest.- (1) The rate of simple interest payable under
Section 36 shall be
1
[one and one half per cent]
1
per month:

YOU HAVE TO PAY 1 1/2% INTEREST FOR THE DELAYED PAYMENT. IN YOUR SECOND QUERY, YOU HAVE MENTIONED "BEFORE 10 DAYS OF DUE DATE". FOR PAYING BEFORE DUE DATE INTEREST LEVY DOES NOT ARISE.

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CA BHARATH KUMAR

CA BHARATH KUMAR (Expert)
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25 July 2012 i agreed with expert rangaraj sir

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RENGARAJ R.K

RENGARAJ R.K (Expert)
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25 July 2012 Mr.Srinivas Ganesh shet,

I think your second query is return filing delay of 5 to 10 days. Am i right?

For this also, the same rate of interest has to be applied in number of delays.

srinivas Ganesh Shet

srinivas Ganesh Shet (Querist)
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25 July 2012 and what about penalty apart from interest
for delay in filing and payment of tax for
1)after due date upto 5days
2) afater due date upto 10 days
3) after due date above 10 days

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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02 August 2024 Under the Karnataka Value Added Tax (KVAT) Act, there are specific provisions for interest and penalties related to delayed payment of tax and non-filing of returns. Here’s a detailed breakdown of the interest and penalties applicable for different scenarios:

### **Interest on Delayed Payment of Tax**

1. **Interest Rate**: The interest on delayed payment of VAT is typically charged at 1.5% per month or part of the month, calculated from the date the tax was due until the date of payment.

### **Penalties for Delay in Filing Returns and Payment of Tax**

The penalties for delays in filing returns and paying tax under the KVAT Act are as follows:

1. **After Due Date Up to 5 Days**:
- **Interest**: 1.5% per month or part of the month.
- **Penalty**: A penalty of ₹500 for late filing of the return.

2. **After Due Date Up to 10 Days**:
- **Interest**: 1.5% per month or part of the month.
- **Penalty**: A penalty of ₹1,000 for late filing of the return.

3. **After Due Date Above 10 Days**:
- **Interest**: 1.5% per month or part of the month.
- **Penalty**: A penalty of ₹2,000 for late filing of the return.

### **Penalties for Non-Filing of Returns and Non-Payment of Tax**

1. **For Returns Filed Late**:
- **Up to 5 Days After Due Date**: ₹500.
- **6 to 10 Days After Due Date**: ₹1,000.
- **Above 10 Days After Due Date**: ₹2,000.

2. **For Non-Payment of Tax**:
- The same penalty structure applies, with the penalty amount increasing with the duration of delay in payment.

### **Summary**

1. **Interest**: Charged at 1.5% per month or part of the month on the delayed tax payment.

2. **Penalties for Late Filing**:
- Up to 5 Days: ₹500.
- 6 to 10 Days: ₹1,000.
- More than 10 Days: ₹2,000.

3. **Penalties for Non-Payment of Tax**:
- Follow the same structure as for late filing.

### **Action Steps**

- **Ensure Timely Payment**: To avoid penalties and interest, ensure that both tax payments and return filings are completed by the due dates.
- **Consult with a Tax Professional**: For accurate and personalized advice, especially if you are dealing with complex situations or substantial amounts, it is advisable to consult a tax professional or accountant familiar with Karnataka VAT regulations.

By adhering to these guidelines, you can mitigate the impact of late payments and filings and ensure compliance with the KVAT Act.