Pre-Deposit explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Some GST orders demand no tax at all. The order imposes only a penalty, for example on someone who issued an invoice without any supply, or on the owner of goods detained in transit. The pre-deposit rule for these orders changed on 1 October 2025, and the change is easy to miss because the old rule covered just one kind of order. If you hold such an order, our GST appeal team can work out the deposit and file in time.
Under the proviso to section 107(6), as substituted by the Finance Act 2025 with effect from 1 October 2025, an appeal against an order that demands penalty without any demand of tax cannot be filed unless 10% of that penalty is paid. Appeal to the Appellate Tribunal under section 112(8) needs a further 10% of the penalty, in addition. Before the change, the penalty-only proviso applied only to orders under section 129(3), and the required sum was 25% of the penalty.
The rule in the statute
Section 107(6) says no appeal can be filed unless the appellant has paid, in full, the part of tax, interest, fine, fee and penalty admitted by him, and a sum equal to 10% of the remaining amount of tax in dispute, subject to a maximum of Rs. 20 crore (Rs. 25 crore before 1 November 2024).
The proviso handles orders with no tax element. It reads, in substance: where an order demands penalty without involving demand of any tax, no appeal is to be filed unless a sum equal to ten per cent of the said penalty has been paid. The Background Material's footnote records that this proviso was substituted by the Finance Act 2025 with effect from 1 October 2025, notified by S.O. 4206(E) dated 17 September 2025. The earlier proviso, inserted by the Finance Act 2021 with effect from 1 January 2022, applied only to orders under section 129(3) and required 25% of the penalty.
| Order type | First appeal (section 107(6)) | Tribunal (section 112(8)) |
|---|---|---|
| Tax (with or without penalty) | Admitted amount in full, plus 10% of remaining tax in dispute, cap Rs. 20 crore | Another 10% of remaining tax in dispute, cap Rs. 20 crore, in addition to first appeal deposit |
| Penalty only, no tax | 10% of the penalty | Another 10% of the penalty, in addition |
For the first two rows, recovery of the balance is deemed stayed once the required sum is paid (section 107(7), and the corresponding stay at the Tribunal stage).
Which orders are "penalty-only"?
The proviso turns on the order, not the section. Penalty-only orders include an order under section 129(3) on detained goods, and an order under section 122 against a person for issuing tax invoices without supply where no tax demand is raised. CBIC's Circular 171/03/2022-GST, reproduced in the Background Material, says no tax demand lies against an invoice issuer for an invoice with no underlying supply; he is exposed to penalty under section 122(1)(ii). That kind of order is exactly where the penalty-only proviso matters. See penalty for fake invoices for how these orders arise.
Where an order demands tax as well as penalty, the statutory text computes the pre-deposit on the remaining tax in dispute. The penalty-only proviso does not apply to such an order, so read the section 107(6) wording carefully for mixed orders and get the computation checked before paying.
Worked illustration
An order under section 129(3) demands penalty of Rs. 4,00,000 on detained goods. No tax is demanded.
- First appeal: Rs. 40,000 (10% of the penalty) must be paid before the appeal is filed.
- If the appellate authority confirms the penalty and you go to the Tribunal: a further Rs. 40,000 under section 112(8) proviso, in addition to the Rs. 40,000 already paid.
- Under the old proviso (orders before the change, where it applied), the first appeal would have required 25%, which is Rs. 1,00,000.
For a tax order, say tax of Rs. 20,00,000 is in dispute with Rs. 2,00,000 admitted and paid. The deposit is Rs. 2,00,000 plus 10% of the remaining Rs. 18,00,000, which is Rs. 1,80,000.
Mechanics of the first appeal
- Time: three months from the date the order is communicated; the appellate authority may allow a further one month if sufficient cause is shown (section 107(1) and (4)).
- Form: FORM GST APL-01, filed electronically, with a provisional acknowledgement issued immediately (Rule 108).
- Forum: the Commissioner (Appeals) where the order is by an Additional or Joint Commissioner, and an officer not below the rank of Joint Commissioner (Appeals) where it is by a Deputy or Assistant Commissioner or Superintendent.
- Adjournments: not more than three to a party (section 107(9)).
- No remand: the appellate authority cannot send the case back to the adjudicating authority (section 107(11)).
- Decision time: where possible, within one year of filing (section 107(13)).
On paying the deposit, recovery of the balance is deemed stayed.
Paying the deposit: a point still contested
The Background Material notes that High Courts have differed on whether pre-deposit may be paid from the electronic credit ledger. The Orissa High Court (Jyoti Construction) held it cannot; the Bombay High Court (Oasis Realty) held it can. Check the view taken by the High Court for your State before you choose the mode of payment.
At the Tribunal
The Tribunal may refuse to admit an appeal where the tax or ITC involved, or the fine, fee or penalty, does not exceed Rs. 50,000, but that is a discretion. For the Tribunal stage, the appeal is filed in APL-05 electronically. Appeals by the department carry no pre-deposit. For the full Tribunal filing steps, see GSTAT procedure rules 2025.
Need help with an appeal against a penalty order?
Computing the deposit correctly and filing within time are the two things that can sink an appeal before it is heard. Our team can review the order, work out the amount and prepare the grounds through GST appeal support. If a detention order is behind the penalty, the route from the road is described in e-way bill interception.
Key takeaways
- Penalty-only orders: 10% of the penalty as pre-deposit for the first appeal (from 1 October 2025).
- The earlier rule covered only section 129(3) orders, at 25% of the penalty.
- The Tribunal needs a further 10% of the penalty, in addition to the first deposit.
- Tax orders: admitted amount plus 10% of remaining tax in dispute, cap Rs. 20 crore.
- Appeal within three months (plus one month on cause shown); pay before filing, or the appeal is not maintainable.
Read next
- Section 107: The First Appeal and the Pre-Deposit
- Section 112: Appeal to the GSTAT and the Second Pre-Deposit
- GSTAT Procedure Rules 2025: Filing, Hearing and Adjournment
- Penalty for Fake Invoices and Beneficiaries: Section 122(1A)
Disclaimer: Positions stated as on 30 September 2026, based on the CGST and IGST Acts and Rules as amended, the Finance Act 2026, and the ICAI Background Material on GST (14th Edition, July 2026). Verify current notifications before acting.