Section 73 GST Avoid Penalty by Acting Within 30 Days
Under Section 73 of the CGST Act, taxpayers can resolve GST disputes involving short payment or non-payment of tax without penalty—if they act voluntarily or within 30 days of a show cause notice.
Let’s break this down for business owners, consultants, and tax filers to help you save money and stay compliant.
What is Section 73 of CGST Act?
Section 73 deals with tax dues not involving fraud, wilful misstatement, or suppression of facts.
Here’s when it applies:
- Tax not paid
- Tax short paid
- Wrong input tax credit (ITC) claimed
- Refund wrongly sanctioned
➡️ But no fraud or intent to evade must be involved.
(For fraud-related cases, Section 74 applies with stricter penalties.)
Key Relief Under Section 73
| Situation | Penalty | Conditions |
|---|---|---|
| Tax paid before SCN (Show Cause Notice) | No penalty | Also pay interest |
| Tax paid within 30 days of SCN | No penalty | Pay full tax + interest |
| Tax paid after 30 days of SCN | Penalty = 10% of tax | Minimum ₹10,000 |
💡 Expert Tip: Always review monthly returns for errors. Voluntary correction before SCN can save your business from unnecessary penalty and litigation.
Legal Backing
- Section 73(5) – Voluntary tax payment before SCN
- Section 73(8) – Payment within 30 days of SCN
- Section 73(9) – Penalty if delay exceeds 30 days
🔗 Refer: CGST Act, 2017 – Section 73 (govt link, PDF)
How to Avail the Relief – Step-by-Step
- Self-assess the error in GSTR-3B or GSTR-1
- Calculate tax + interest (per Sec 50 of CGST Act)
- Pay via DRC-03 form on GST portal
- Keep proof of payment for future audits
- If SCN is received, respond within 30 days with payment details
🔹 DRC-03 = Voluntary payment form
🔹 Interest = 18% p.a. from due date to actual payment
Who Should Care?
- Small businesses who miss return deadlines
- CA firms handling multiple GST clients
- Consultants resolving legacy tax errors
- Startups that corrected ITC claims later
Section 73 vs Section 74 – Quick Comparison
| Feature | Section 73 | Section 74 |
|---|---|---|
| Fraud involved? | ❌ No | ✅ Yes |
| Penalty waived? | ✅ If within 30 days | 🚫 Not fully |
| Applicable cases | Clerical/ITC errors | Fake invoices, suppression |
| Penalty | Up to 10% | Up to 100% |
CBDT Circulars & Clarifications
- CBIC FAQs (2019) clarified that voluntary payment before SCN under Sec 73 means no penalty will be imposed
- Multiple High Court decisions (e.g., Delhi HC in Bharti Airtel case) confirm benefit if taxpayers pay before proceedings start
Practical View: Why Use This Provision?
“Section 73 is your chance to fix mistakes without litigation. Timely action means peace of mind and better GST ratings.”
— Efiletax GST Expert Panel
🔗 Related:
FAQ – Section 73 GST
Q1. Can I use Section 73 even after SCN is issued?
Yes, you can pay within 30 days of SCN and avoid penalty.
Q2. Do I still need to pay interest?
Yes. Interest is mandatory even if penalty is waived.
Q3. What if I delay beyond 30 days after SCN?
Then a 10% penalty applies (minimum ₹10,000).
Final Thoughts
Section 73 is a golden window to resolve tax disputes without penalties. If you’ve made honest mistakes in GST filings, don’t wait. Voluntary payment or a quick response to SCN can save you time, cost, and stress.
👉 Need help filing DRC-03 or responding to a GST notice? Contact Efiletax today.
Summary
Section 73 of CGST Act allows taxpayers to avoid GST penalties if tax shortfall is paid voluntarily or within 30 days of notice. It applies to cases with no fraud. Pay through DRC-03, save penalty, and stay compliant. Learn the process, rules, and expert tips at Efiletax.