Penalty on Rule 86B

[NARENDER YARRAGORLA]

What is the penalty for breaching of Rule 86b? and If breaching continues by en number of months the penalty will change?

[KASTURI SETHI]

Equal to the tax evaded or input tax credit availed irregularly.

Extract of Section 122 of CGST Act. Below (xxi).

he shall be liable to pay a penalty of ten thousand rupees or an amount equivalent to the tax evaded or the tax not deducted under section 51 or short deducted or deducted but not paid to the Government or tax not collected under section 52 or short collected or collected but not paid to the Government or input tax credit availed of or passed on or distributed irregularly, or the refund claimed fraudulently, whichever is higher.

If any tax payer commits offence of the same nature again next month, afresh penalty will be imposed.

[KASTURI SETHI]

Minimum penalty ₹ 10,000/- and maximum penalty equal to the tax evaded, whichever is higher. It is one time penalty for one offence. It is not recurring.

AI Summary

Penalty for 86B breaches equals tax evaded or irregular ITC; minimum statutory floor and repeat offence attracts fresh penalty. Breach of Rule 86B attracts a penalty equal to the greater of a prescribed minimum and an amount equivalent to the tax evaded, tax not deducted or collected, short paid taxes, or input tax credit availed or passed on irregularly; each subsequent commission of the same offence may attract a fresh penalty under the same rule.