What penalties will businesses face for non-compliance with GST return submissions?

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Businesses Face Penalties for Non-Compliance with GST Return Submissions

Businesses that fail to submit their Goods and Services Tax (GST) returns by the October 11 deadline will be subjected to auto-assessment and face significant penalties for non-compliance. This auto-assessment process will calculate tax returns based on the revenue initially declared during the GST application. Approximately 22,184 businesses, including 800 with turnovers exceeding RM5 million, have not yet filed their GST-03 statements, representing about 6% of the 390,000 registered entities.
Auto-Assessment and Payment Notices

Following the auto-assessment, the Customs Department will issue tax claim notices to these businesses. These notices will require payment within a two-week period. Companies with a turnover exceeding RM5 million are mandated to submit their returns on a monthly basis, while other businesses are required to do so quarterly.
Financial Penalties for Non-Payment

Failure to settle the tax claim notices within the stipulated two weeks will result in substantial financial penalties. The first offense will incur a compound of RM25,000, with a further RM25,000 for a second offense. This tiered penalty structure is designed to compel compliance and address repeated non-adherence to the submission requirements.
Legal Ramifications for Continued Non-Compliance

Persistent non-compliance beyond the financial penalties can lead to more severe legal consequences. Under Section 41(6) of the GST Act, businesses may face a fine not exceeding RM50,000, imprisonment for up to three years, or a combination of both. The Customs Department has indicated a willingness to provide guidance and discuss issues with businesses to facilitate correct submissions, thereby avoiding the need for court action.

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What penalties will businesses face for non-compliance with GST return submissions?

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