Section 123 – Penalty for Failure to Furnish Information Return
Section 123 of CGST Act, 2017 – Penalty for Failure to Furnish Information Return
Updated on: June 2026 (as applicable till date)
Prepared by: Yours Tax Consultant
1. Objective of Section 123
Section 123 imposes a penalty on persons who are required to furnish an Information Return under Section 150 of the CGST Act but fail to do so within the prescribed time.
The provision helps the GST administration obtain information from various sources for verification, compliance monitoring and prevention of tax evasion.
2. Statutory Provision – Section 123
Where a person who is required to furnish an information return under Section 150 fails to do so within the prescribed period, the proper officer may direct such person to furnish the return within a specified period.
If the person continues to fail in furnishing the information return, he shall be liable to a penalty of:
₹100 per day during which the failure continues, subject to a maximum penalty of ₹5,000.
3. What is an Information Return?
An Information Return is a statement containing specified information required to be furnished under Section 150 by notified persons.
The information is generally used for:
- Cross-verification of transactions
- Detection of tax evasion
- Risk assessment
- Data analytics and compliance monitoring
4. Persons Required to Furnish Information Return
Under Section 150, the Government may require certain persons to furnish information returns, such as:
- Tax authorities
- Banking companies
- Financial institutions
- Electricity distribution companies
- Registrars and registration authorities
- Stock exchanges
- Depositories
- Any other notified person
5. Conditions for Imposition of Penalty
Penalty under Section 123 may be imposed when:
- The person is legally required to furnish an information return
- The return is not furnished within the prescribed time
- A direction is issued by the proper officer
- The default continues despite such direction
6. Quantum of Penalty
| Particulars | Penalty |
|---|---|
| Failure to furnish Information Return | ₹100 per day |
| Maximum Penalty | ₹5,000 |
7. Practical Examples
Example 1:
A bank is required to furnish an information return under Section 150.
It fails to furnish the return even after receiving a direction from the
proper officer.
Penalty under Section 123 may be imposed.
Example 2:
A notified authority delays filing the required information return
for 20 days after the specified date.
Penalty may be calculated at ₹100 per day,
subject to the statutory maximum.
8. Importance of Section 123
This provision strengthens GST enforcement by ensuring that data required for verification and intelligence purposes is furnished in a timely manner.
It supports:
- Data-driven tax administration
- Detection of suspicious transactions
- Improved compliance monitoring
- Better coordination among reporting entities
9. Section 123 vs Section 124
| Section 123 | Section 124 |
|---|---|
| Failure to furnish Information Return | Failure to furnish statistics |
| Linked to Section 150 | Linked to Section 151 |
| Penalty up to ₹5,000 | Fine up to ₹10,000 and continuing fine |
10. Related Provisions
- Section 150 – Obligation to Furnish Information Return
- Section 124 – Fine for Failure to Furnish Statistics
11. Professional Insight
Section 123 may appear to be a minor compliance provision, but it plays an important role in GST intelligence and analytics. Timely furnishing of information returns enables authorities to identify mismatches, detect tax evasion and strengthen overall compliance monitoring under the GST regime.
Disclaimer: This article is prepared based on the CGST Act, 2017 and the legal position applicable as on date. Readers should refer to the latest amendments, rules, notifications and judicial decisions before taking any action.
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