I'm not paying GST on time and I'm using the GST money for other payments — what happens?

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Quick answer. Stop. GST you collect from customers was never your money — you're holding it in trust for the government. Using it for other payments is treated very seriously: you must pay it to the government regardless, plus heavy interest and a penalty that can equal the entire amount, with no time limit on recovery. Why this is dangerous, not just late. When you collect GST, you're a collecting agent — that money belongs to the government from the moment you charge it. Spending it on salaries or suppliers isn't “using cashflow”; it's spending money that isn't yours. The law (Section 76) is blunt about it: any amount collected as tax must be paid to the government immediately, whether or not the underlying sale was even taxable. The consequences. You'll owe the full amount anyway, plus interest at around 18% per year from the date you collected it until you pay, plus a penalty of up to 100% of the amount (minimum ₹10,000). And unlike normal tax assessments, there's no time limit — the government can come after this years later. In extreme cases, it can lead to prosecution. Our honest take. Treat GST (and TDS) as money in a separate box you never touch. The moment you dip into it to fund the business, you've taken a very expensive, high-interest, penalty-bearing loan from the government — one that can surface at the worst possible time, like during due diligence. Fix this first.