Late Fees and Interest on GST Return

Late fees and interest form important components of the Goods and Services Tax (GST) payment and are incurred by business in case of delay in submitting or filing GST returns. The article covers all latest announcements on Late fees and Interest charge in a comprehensive manner!

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Latest Updates on Interest and Late fee

31st March 2023
1. CBIC reduced the late fee for delayed GSTR-9 filing from FY 2022-23 onwards as follows: 
  - Taxpayers whose Annual Aggregate Turnover (AATO) is up to Rs.5 cr shall pay Rs. 50 per day subject to a maximum of 0.04% of turnover in state or union territory.
  - Taxpayers whose AATO is more than Rs.5 cr to 20 cr shall pay Rs 100 per day subject to a maximum of 0.04% of turnover in state or union territory.

2. Taxpayers who file pending GSTR-9 for FYs 2017-18, 2018-19, 2019-20, 2020-21, and 2021-22 shall pay a maximum late fee of Rs 20,000. This reduced late fee applies only when you file pending GSTR-9 between 01st April 2023 to 30th June 2023.

18th February 2023
49th GST Council meeting updates-
1. Council recommended the late fee rationalisation for delayed GSTR-9 filing from FY 2022-23 onwards as follows: 
        (a) Registered persons with Annual Aggregate Turnover (AATO) up to Rs.5 cr is reduced to Rs. 25 per day subject to a maximum of 0.02% of turnover.
        (b) Registered persons with AATO of more than Rs.5 cr to 20 cr is reduced to Rs 50 per day subject to a maximum of 0.02% of turnover.
2. The Council recommended an amnesty scheme for pending GSTR-4, GSTR-9 and GSTR-10 returns. This scheme comes with a conditional waiver/ reduction of late fees.

1st February 2022
Budget 2022 update-
Section 47 is amended to provide for a late fee levy for delayed filing of return under Section 52 and Section 38 reference has been removed.

28th May 2021
As per the outcome of 43rd GST Council meeting and CBIC notification, following are the updates:
(1) Amendment to Section 50 vide Finance Act 2021 has been notified by the CBIC which came into effect from 1st July 2017. As per the amendment, interest shall be computed on the net tax liability to be debited from electronic cash ledger after ITC is utilised.
(2) The much awaited GST amnesty scheme was given a go ahead. As per the announcement, those taxpayers who haven’t filed GSTR-3B for any earlier tax periods between July 2017 to April 2021 can file now between 1st June 2021 up to 31st August 2021 with reduced maximum late fee as follows:
        (a) Maximum late fee has been capped at a maximum of Rs 500 per return ( i.e Rs. 250/- each for CGST & SGST) in case of nil GSTR-1 and GSTR-3B filing
        (b) Maximum late fee is Rs 1000 per return ( i.e Rs. 500/- each for CGST & SGST) for other taxpayers.
(3) Late fee has been rationalised for future tax periods in case of GSTR-3B, as follows:
        (a) In case of nil GSTR-3B filing, the maximum late fee charged shall be capped at Rs.500 per return (i.e Rs. 250/- each for CGST & SGST).
        (b) In GSTR-1 and GSTR-3B other than nil filing, maximum late fee is fixed based on annual turnover slab, as follows:
                (i) If the annual turnover in the previous financial year is upto Rs.1.5 crore then the late fee of maximum Rs 2,000 per return can only be charged (i.e Rs.1000 each for CGST and SGST).
                (ii) If the turnover ranges between Rs.1.5 crore and Rs.5 crore then the maximum late fee of Rs.5,000 per return can only be charged (i.e Rs. 2500 each for CGST and SGST).
                (iii) If the turnover is more than Rs.5 crore then late fee of maximum Rs.10,000 (i.e Rs. 5000 per CGST and SGST) can be charged.
(4) For any delayed submission of PMT-06 by QRMP taxpayers for April 2021 and May 2021, interest relief has been provided as follows:
        (a) For April 2021, No interest is charged for delayed submission up to 9th June, whereas 9% of reduced interest is charged between 10th June and 9th July, and 18% of interest is charged thereafter.
        (b) For May 2021, No interest is charged for delayed submission up to 10th July, whereas 9% of reduced interest is charged between 11th and 25th July, and 18% of interest is charged thereafter.
(5) The late fee and interest relief has been extended for a further period for filing GSTR-3B for March, April and May 2021. Read our article 43rd GST Council meeting to know the period of relief.

Introduction to Late Fees under GST

As per the GST laws, late fee is an amount charged for delay in filing the GST returns. A prescribed late fees will be charged for each day of delay, when a GST registered business misses filing GST returns within the prescribed due dates*.

The late fee should be paid in cash and the taxpayer cannot use the Input Tax Credit (ITC) available in electronic credit ledger for payment of late fee.

The late fee is also applicable for the delay in filing nil returns. For example, one has to pay a late fee even though there are no sales or purchases and no GST liability to declare in the GSTR-3B.

The late fee will depend upon the number of days of delay from the due date. GST return in GSTR-3B is filed on 23rd January 2021, 3 days after the prescribed due date i.e 20th January 2021. The late fees will be calculated for three days and it should be deposited in cash.

However, currently, the GST portal is aligned to charge a late fee only on returns GSTR-3B, GSTR-4, GSTR-5, GSTR-5A, GSTR-6, GSTR-8, GSTR-7 and GSTR-9 only.

Amount of late fees applicable

Note that the maximum late fees have been rationalised from the month of June 2021 and quarter ending June 2021.

As per the 43rd GST Council meeting’s outcome, maximum late fee is reduced to the following amounts based on type of return and turnover slab, notified via the CGST notifications 19/2021, 20/2021 dated 1st June 2021 for GSTR-3B and GSTR-1.

• In case of nil GSTR-1 and GSTR-3B filing, the maximum late fee charged shall be capped at Rs.500 per return (i.e Rs. 250 each for CGST & SGST).
• In GSTR-1 and GSTR-3B other than nil filing, maximum late fee is fixed based on annual turnover slab, as follows:
  • If the annual turnover in the previous financial year is upto Rs.1.5 crore then the late fee of maximum Rs 2,000 per return can only be charged (i.e Rs.1000 each for CGST and SGST).
  • If the turnover ranges between Rs.1.5 crore and Rs.5 crore then the maximum late fee of Rs.5,000 per return can only be charged  (i.e Rs. 2500 each for CGST and SGST).
  • If the turnover is more than Rs.5 crore then late fee of maximum Rs.10,000 (i.e Rs. 5000 per CGST and SGST) can be charged.

Additionally, the late fee has been rationalised for delayed filing of GSTR-4 from FY 2021-22, via the CGST notification 21/2021 dated 1st June 2021. The maximum late fee will be restricted to Rs.500 per return for nil filing and Rs. 2000 for other than nil filing.

According to CGST notification 22/2021 dated 1st June 2021, the late fee chargeable for GSTR-7 i.e TDS filing under GST shall be of maximum Rs. 2,000 while late fee per day charged is reduced from Rs.200 to Rs.50 per day of delay, per act, per return.

Late fee computation for GSTR-3B and GSTR-1

• As per the GST Acts, for intrastate supplies, the late fee should be paid under both the CGST and SGST Act as follows:

• The Nil return filers must pay the below mentioned late fee:

For example, a Taxpayer has filed GSTR-3B for the month of December 2020 on 23rd January 2021, where actual due date was 20th Jan 2021.

Amount of late fees to be paid would be Rs.150 (Rs. 50 per day for 3 days). The late fee would be Rs.75 under CGST and Rs.75 under SGST.

If the above return was a return with ‘Nil’ tax liability then late fees would be Rs. 60 (20 per day  3 days). The late fee would be Rs.30 under CGST and Rs.30 under SGST.

* The original late fees used to be Rs.100 per day under each CGST Act and SGST Act. Also, the original late fee for Nil return filers used to be Rs.25 per day under each CGST Act and SGST Act. However, CBIC has notified reduced late fees to provide relief for businesses having difficulties in GST return filing.

You can use the calculator here to find out the applicable late fees and interest: ClearTax GSTR-3B Interest and Late Fee Calculator

For GST annual returns (GSTR-9)

*CBIC issued notification no: 07/2023–Central Tax to reduce late fee for delayed GSTR-9 filing from FY 2022-23 onwards:

1. Reduced the late fee for GSTR-9 from FY 2022-23:
   1. Taxpayers whose Annual Aggregate Turnover (AATO) is up to Rs.5 cr shall pay Rs. 50 per day subject to a maximum of 0.04% of turnover in state or union territory.
   2. Taxpayers whose AATO is more than Rs.5 cr to 20 cr shall pay Rs 100 per day subject to a maximum of 0.04% of turnover in state or union territory.
2.  Also, taxpayers who file pending GSTR-9 for FYs 2017-18, 2018-19, 2019-20, 2020-21, and 2021-22 shall pay a maximum late fee of Rs 20,000. This reduced late fee applies only when you file pending GSTR-9 between 01st April 2023 to 30th June 2023.

Up-to-date List of late fee notifications

Following are the changes that have been made on the applicability of the late fees:

GSTR-1

GSTR-3B

GSTR-4 (Annual)

GSTR-5

GSTR-5A

GSTR-6

Note: Rest of the returns like GSTR-7, GSTR-8, or GSTR-9 will have late fees applicable to them as per the Act at normal fee. 

** If paid before the waiver, this amount will be credited into the electronic cash ledger for use, to pay against the tax liability. 

^ The previous notification 6/2018 was cancelled prospectively.

How to deposit Late fees with Government

Amount of Late fee applicable will automatically be calculated by the GST portal while submitting the GST returns.

The Late fee is paid in cash separately for CGST, and SGST in separate electronic cash ledgers. GST return cannot be filed without the payment of the Late fee.

Late fee for the month includes previous month’s late fee charged due to delay in filing of the return. Also, non-payment or late payment of GST attracts Interest.

Interest under GST & Calculation

Interest is applicable on late payment of GST liability on the net tax liability after reducing the input tax credit claims. The interest has to be paid by every taxpayer who:

• Makes a delayed GST payment i.e. pays CGST, SGST or IGST after the due date.
• Claims excess input tax credit
• Reduces excess output tax liability

If GST is not paid within the due dates of filing return Interest at following rates has to be paid:

* Interest has been reduced on occasion of the COVID-19 pandemic for various periods. Read our article “GST calendar” for more information.

The Interest has to be calculated from the next day on which tax was due. 

For example, a taxpayer fails to make a tax payment of Rs. 10,000 for the month of December 2020, where the due date was 20th January 2021. If he makes the payment on 20th February 2021, the interest for the delay period (31 days: from 21st January till 20th February) will be calculated as follows:

Rs.10,000 * 31/365 * 18% = Rs.153

Thus, it is important to make tax payments and file GST returns within due dates. You can use ClearTax GST Software , which is a one-stop solution to file GST Returns quickly and easily. Use ClearTax GST Software and never miss a deadline.

Frequently Asked Questions (FAQs)

1. What happens if I don’t file GST returns?

If you don’t file the GST returns that are required to be filed under the law, then late fees will apply for every day of default that occurs. Further, if there is any tax due, then interest will apply at the rate of 18% per annum on the tax liability.

2. Do I need to file GST returns if I don’t have any GST payable?

Yes, if you are a GST-registered taxpayer, then you will need to file the applicable GST returns irrespective of whether you have a tax liability or not. If you have no transactions for the month, you can file a Nil return. If you have only purchases and no sales, then you can file GSTR-3B.

3. How is the GST late fee calculated?

You can refer to the section above on ‘Late fee computation for GSTR-3B and GSTR-1’ or use the ClearTax GSTR-3B Interest and Late Fee Calculator 
to calculate the applicable interest and late fees.

4. What happens if you don’t pay GST late fees?

The GST late fees get auto-populated in the next period’s GST return. There is no option to not pay late fees. The system will not allow you to proceed with filing your GST returns until you pay the late fees.

5. What is the late fee for GSTR-3B?

You can refer to the section above ‘Amount of late fees applicable’ or click here to find out the late fees on delayed GSTR-3B filing.

6. What if the GST returns are not filed for 6 months?

If you have not filed your GST returns for 6 months, you could risk your GST registration getting cancelled. Note that the prescribed period for default could get reduced by the government.

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