Late Fees and Interest on GST Returns

When a business doesn't file a GST (Goods and Services Tax) return or pay tax liability on time, the department will charge late fees and interest. Hence, understanding these aspects is important for businesses. This article covers all about interest and late fees under GST.

Taxpayer Due Dates Under GST

The due dates for GST returns depends on the type of taxpayer and return forms.

**For the taxpayers with aggregate turnover equal to or below Rs 5 crore, eligible and remain opted into the QRMP scheme, 22nd of month next to the quarter for taxpayers in category X states/UTs and 24th of month next to the quarter for taxpayers in category Y states/UTs 

Category X: Chhattisgarh, Madhya Pradesh, Gujarat, Maharashtra, Karnataka, Goa, Kerala, Tamil Nadu, Telangana or Andhra Pradesh or the Union territories of Daman and Diu and Dadra and Nagar Haveli, Puducherry, Andaman and Nicobar Islands and Lakshadweep.

Category Y: Himachal Pradesh, Punjab, Uttarakhand, Haryana, Rajasthan, Uttar Pradesh, Bihar, Sikkim, Arunachal Pradesh, Nagaland, Manipur, Mizoram, Tripura, Meghalaya, Assam, West Bengal, Jharkhand or Odisha or the Union Territories of Jammu and Kashmir, Ladakh, Chandigarh and New Delhi.

Please note: GST filings as per the CGST Act are subject to changes by CBIC notifications/orders.

Interest on Late Payment of GST

Interest is applicable on late payment of GST liability on the net tax liability after reducing the input tax credit claims. Interest charges apply when a taxpayer does not pay the GST amount by the respective due date. (You can find the list of GST due dates in the section above). 

 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:

For example, a taxpayer fails to make a tax payment of Rs.10,000 for the month of May 2024, where the due date was 20th June 2024. If they make the payment on 20th July 2024, the interest for the delay period (30 days: from 21st June till 20th July) will be calculated as follows:
Interest = (Outstanding Tax x Interest Rate x Number of Days) / 365
Interest = (10,000 x 18% x 30) / 365 = ₹147.95

What are Late Fees Under GST?

As per the GST laws, late fee is an amount charged for delay in filing the GST returns. It is a penalty charged for missing the GST return filing due date. The department prescribed late fees charged for each day of delay from prescribed due dates as listed in the section above.

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.

For example, GSTR-3B is filed on 23rd January 2024, 3 days after the prescribed due date i.e 20th January 2024. The late fees will be calculated for three days and it should be deposited in cash.

The GST portal charges a late fee on GST returns such as:

• GSTR-1
• GSTR-3B
• GSTR-4
• GSTR-5
• GSTR-5A
• GSTR-6
• GSTR-8
• GSTR-7
• GSTR-9

Note: 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.

Late Fees and Penalties Under GST

The following is the list of late fees and penalties under the GST law for delayed filing of GST returns beyond the due dates listed above.

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 March 2024 on 25th March 2024, where actual due date was 20th March 2024.

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.

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

Late Fees for GST annual return (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.

Maximum Amount of Late Fees Under GST

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, 20/2021,21/2021 dated 1st June 2021 for GSTR-3B and GSTR-1.

Further, according to CGST notification 22/2021 dated 1st June 2021, the late fee chargeable for GSTR-7 is reduced from Rs.200 to Rs.50 per day of delay, per act, per return.

List of Late Fee Notifications up to 2021

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 Pay Late Fees on the GST portal?

The late fee applicable will be automatically calculated by the GST portal while submitting the GST returns. The current month/quarter late fee should be paid when filing the next month/quarter 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.

Rules Applicable for GST Payment for Taxpayers

GST payment rules vary based on a few factors. Here are the main rules for regular taxpayers, composition scheme taxpayers, and casual taxable persons:
1.  Regular Taxpayers: Must file GSTR-1 and GSTR-3B. Filing must include payment of due tax to avoid interest and late fees.
2.  Composition Scheme Taxpayers: Taxpayers under the composition scheme file returns annually (GSTR-4) but must make quarterly payments via CMP-08. Late payments attract both interest and penalties.
3.  Casual Taxable Persons: Casual taxpayers, such as those temporarily engaged in business, need to register for GST and pay taxes in advance based on their estimated liability. Failing to pay on time incurs penalties similar to regular taxpayers.
Each category of taxpayers has its own rules in regard to return forms and deadlines, but the general advice is the same—meet the due dates to avoid extra charges. In addition, taxpayers must maintain proper documentation to support GST payments and input tax credit claimed.
 

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