Late Fees and Interest on GST Returns

The “Late Fee,” as defined by the GST statutes, is an amount imposed for late filing of GST returns. When a GST registered firm fails to file its GST Return by the due date, a stipulated late fee will be assessed for each day of delay. It also applies to the late filing of nil returns. Even if there are no sales or purchases and no GST liability to declare in the GSTR-3B, one must pay a late charge.

It is determined by the number of days from the due date. For example, if a GST Return in GSTR-3B is filed on January 23, 2021, three days beyond the deadline, the late fees will be computed and must be paid in cash.

Late fines are only applied to GSTR-3B, GSTR-4, GSTR-5A, GSTR-6, GSTR-7, GSTR-8, and GSTR-9 returns at the moment.

Calculation of late fees for GSTR-3B and GSTR-1

According to the GST Acts, the late charge for intrastate sales shall be paid under both the CGST and SGST Acts as follows:

Name of the ActLate fees for every day of delay
Central Goods and Services Act, 2017Rs. 25
Respective  State Goods and Services Act, 2017 (or) Union Territory Goods and Services Act, 2017Rs. 25  
Total late fees to be paid per dayRs. 50

Up till May 2021, the law sets a maximum late cost of Rs. 10,000. This indicates that the Government’s maximum late fee for each return filed under each Act is Rs. 5,000. However, beginning with the June 2021 return period, the maximum late charge has been rationalized.

  • The Nil return filers must pay the below mentioned late fee :
Name of the Act  Late fees for every day of delay
CGST ActRs 10
SGST ActRs 10
Total late fees to be paid per dayRs 20

For instance, a taxpayer submitted GSTR-3B for the month of December 2020 on January 23, 2021, despite the fact that the exact due date was January 20, 2021. The amount of late fees that must be paid is Rs.150 (Rs. 50 per day for 3 days). The CGST late cost is Rs.75, while the SGST late fee is Rs.75.

If the aforesaid return had a tax liability of ‘Nil,’ late fees would be Rs. 60. (20 per day 3 days). The CGST late cost is Rs.30, while the SGST late fee is Rs.30.

GSTR-9 Late Fee Calculation
Name of the ActLate fees for every day of delay
Central Goods and Services Act, 2017Rs 100
Respective State Goods and Services Act, 2017 (or) Union territory Goods and Services Act, 2017Rs 100  
Total late fees to be paid  Rs 200

The law has fixed a maximum late fees of an amount calculated at 0.25% of the Turnover for the financial year.

What is the procedure for depositing the late fee?

While uploading GST returns, the GST site will automatically determine the amount of late charge that applies.

The CGST and SGST late fees are paid in cash in separate electronic cash ledgers. The late charge must be paid before the GST return can be filed.

The late cost for the month includes the late fee from the previous month, which was assessed owing to a delay in filing the return. In addition, non-payment or late payment of GST results in interest charges.

Interest under GST and its Calculation

Interest is charged on late GST payments based on the net tax liability after subtracting input tax credit claims. The Interest has to be paid by every taxpayer who:

• Makes a late GST payment, i.e. pays CGST, SGST, or IGST beyond the due date, must pay interest.

• Makes a claim for an excess input tax credit

• Lowers the amount of excess output tax liability.

Interest will be assessed at the following rates if GST is not paid by the due date for filing a return:

Tax paid after due date18% p.a.
Excess ITC Claimed or excess reduction in Output Tax24% p.a.

The interest must be computed starting the day after the tax was due.

For example, suppose a taxpayer fails to pay Rs. 10,000 in tax for the month of December 2020, despite the fact that the due date was January 20, 2021. If he pays on February 20, 2021, the interest for the 31-day delay period (from January 21 to February 20) will be computed as follows:

Rs.10,000 multiplied by 31/365 multiplied by 18% equals Rs.153.

As a result, it’s critical to pay taxes on time and file GST returns by the deadlines.

Leave a Comment

Your email address will not be published. Required fields are marked *