Tax Evasion : Get Ready for Penalty and Jail term

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The tax authorities are in no mood to spare those who fail to pay the Goods and Services Tax (GST) or try to evade it through fraudulent means even as the new indirect tax regime is undergoing a slew of changes to make it easier and more adaptable. In a little over one month, three arrests were made in Mumbai for not paying GST and for the alleged Tax evasion. On April 5, a director of a Mumbai-based company was arrested for allegedly not paying the GST.

Earlier on February 28, in what could be the first arrests, two directors of two companies were arrested for allegedly availing of the tax credit in a fraudulent manner. In fact, a 51-year-old auto parts seller in the national capital, who did not pay taxes in the previous regime, had told Reuters ahead of the GST implementation that once the system comes into place, he will have no choice but to register. “The party will be over,” he had said.

Besides, since the implementation of the GST, the central government has taken action against 17,527 alleged tax evaders/Tax evasion . The government has, once again, extended the deadlines for filing GST returns but what can be understood from GST authorities’ actions is that there is little room for anybody to evade tax or commit fraud.

ALSO READ : Tank full of controversies in implement of GST on petrol and diesel

Actions you may face for failing to pay the GST or evading tax through fraudulent means: 

Non-bailable plus jail term:

  • Tax evasion of over Rs 5 crore would be a non-bailable offence and that the police would have the authority to make an arrest without a warrant
  • If the offences relating to taxable goods and/or services where the amount of tax evaded or the amount of input tax credit wrongly availed or the amount of refund wrongly taken exceeds Rs 5 crore, shall be cognizable and non-bailable

Jail term:

  • If someone is involved in tampering of invoices or giving false information to the authorities or tax officials.
  • If a person doesn’t pay the taxes properly or if he/she adopts illegal methods during the supply or transport of goods
  • 5 years imprisonment if caught ‘violating’ any other tax rules


  • If caught ‘violating’ any other tax rules
  • If someone takes and/or utilises input tax credit without actual receipt of goods and/or services, or deliberately suppresses the sales to evade tax, then it will be counted under Tax evasion .

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