Section 74A Introduced: New Rules for Tax Discrepancies in GST from 2024-25 with Penalties for Fraudulent Claims

Clause 134 of the Finance (No. 2) Bill, 2024 introduces section 74A to the Central Goods and Services Tax Act. It addresses tax determination for unpaid, short-paid, erroneously refunded taxes, or wrongly availed input tax credits from the Financial Year 2024-25 onwards. The provision mandates issuing a notice within 42 months for such discrepancies and sets penalties based on the nature of the discrepancy, with higher penalties for fraud or willful misstatement. Taxpayers can resolve issues by paying due amounts with interest and, in some cases, reduced penalties before or shortly after receiving a notice. The section excludes proceedings under section 132 and applies uniformly from the specified financial year.

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