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Late Fees and Interest on GST Return

Updated on:  

08 min read

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!

Latest Updates on Interest and Late fee

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.

1st May 2021
Late fee for GSTR-3B:
(1) Late filing fee for those with turnover more than Rs.5 crore in the preceding financial year, is waived off for filing of GSTR-3B of March and April 2021 done within first 15 days from the respective due dates.
(2) Late filing fee for those with turnover up to Rs.5 crore in the preceding financial year, is waived off for filing of GSTR-3B of March and April 2021 (if filed monthly) or Jan-Mar 2021 (if filed quarterly) done within first 30 days from the respective due dates.

Interest waiver for GSTR-3B and PMT-06:
The interest charged for late filing of GSTR-3B has been relaxed as follows:
(a) Turnover is more than Rs.5 crore in the preceding financial year and GSTR-3B is filed on a monthly basis, interest is reduced/waived off for April and May 2021 (Due date: 20th May or 20th June) as follows: Interest reduced to 9% for filing on or before 5th May (4th June), but charged at 18% thereafter.
(b) Turnover is up to Rs.5 crore in the preceding financial year and GSTR-3B is filed on a monthly basis, interest is reduced/waived off for April and May 2021 (Due date: 20th May or 20th June) as follows: No interest for filing on or before 5th May (4th June), interest reduced to 9% for filing between 6th May (5th June) and 20th May (19th June), but charged at 18% thereafter.(c) Turnover is up to Rs.5 crore in the preceding financial year and GSTR-3B is filed on a quarterly basis, interest reduced/waived off for Jan-Mar 2021 (Due date: 22nd/24th April) as follows: No interest for filing on or before 7th May (9th May), interest reduced to 9% between 8th May (10th May) and 21st May (23rd May), but charged at 18% thereafter.
(c) Turnover is up to Rs.5 crore in the preceding financial year and GSTR-3B is filed on a quarterly basis, interest reduced/waived off for Jan-Mar 2021 (Due date: 22nd/24th April) as follows: No interest for filing on or before 7th May (9th May), interest reduced to 9% between 8th May (10th May) and 21st May (23rd May), but charged at 18% thereafter.
(d) The interest for late submission of form PMT-06 to pay tax as a QRMP scheme taxpayer is reduced or waived off as follows for April 2021: No interest for filing on or before 9th June, interest reduced to 9% for filing between 10th June and 25th June, but charged at 18% thereafter.

1st February 2021 
Union Budget 2021 outcome: Section 50 of the CGST Act is being amended to provide for a retrospective charge of interest on net cash liability with effect from the 1st July 2017.

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

Maximum late fee rationalised from June 2021 or 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:
Edit
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*
The law has fixed a maximum late fees of Rs 10,000 up to May 2021. This means that in any case, the maximum late fees that can be charged by the Government is Rs 5,000 each return being filed under each Act.
However, the maximum late fee has been rationalised from the June 2021 return period onwards, as given in the above section.
  • The Nil return filers must pay the below mentioned late fee:
Edit
Name of the ActLate fees for every day of delay
CGST ActRs 10*
SGST ActRs 10*
Total late fees to be paid per dayRs 20*
The maximum late fee has been rationalised for GSTR-1 and GSTR-3B from the June 2021 return period onwards, given in the above section.

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.

For GST annual returns (GSTR-9)

Edit
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 paidRs 200*
The law has fixed a maximum late fees of an amount calculated at 0.25% of the Turnover for the financial year.

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

Applicable Return Period/sApplicability of Late feeLink to Notification
June 2021 for monthly filers and quarter of June 2021 for QRMP taxpayersMaximum late fee is reduced. For nil filers, it is fixed at Rs.500 per return. For the rest, it is fixed as per turnover slabs, explained in the above section.20/2021
Months March 2020 – June 2020 and Quarter ending 31st March 2020 and 30th June 2020Waived off completely if filed before the specified dates of July-August 2020.53/2020
Months March 2020 – April 2020 and Quarter ending 31st March 2020Waived off completely if filed before the specified dates of June-July 2020.33/2020
July 2017 – November 2019Waived off completely if filed between the period from 19th December 2019 to 10th January 202074/2019
July 2019Waived off completely for taxpayers in certain districts of the flood-affected States and all districts of J&K41/2019
July 2017 – September 2018Waived off completely**75/2018
July 2017 onwardsReduced Late fee**4/2018

GSTR-3B

Applicable Return Period/sApplicability of Late feeLink to Notification
For June 2021 in case of monthly filers and quarter of June 2021 for QRMP taxpayersMaximum late fee is reduced. For nil filers, it is fixed at Rs.500 per return. For the rest, it is fixed as per turnover slabs, explained in the above section.19/2021
From July 2017 to April 2021Conditional waiver of late fee for delay in filing GSTR-3B, If now filed between 1st June to 31st August 2021 with maximum late fee charged at Rs.500 per act per return.19/2021
For monthly filers: March and April 2021For quarterly filers: Jan-Mar 2021Conditional waiver of late fee for delay in filing GSTR-3BFor turnover more than Rs.5 crore- No late fee for 15 days of delay
For turnover up to Rs.5 crore- No late fee for 30 days of delay
09/2021
For turnover more than Rs 5 crore
May 2020 – July 2020
For turnover equal to or less than Rs 5 crore
February 2020 – July 2020
The maximum late fee to be capped at Rs 500 per return filed after the dates given in notification 52/2020 but before 30th September 2020, whereas nil return to not be charged any late fee.57/2020
1. For turnover more than Rs 5 crore
(February 2020 – April 2020)
2. For turnover equal to or less than Rs 5 crore
(February 2020 – July 2020)
3. Pending for months July 2017 – January 2020
1. & 2. Waived off completely if the filed before the staggered specified dates of June-September 2020.
3. The maximum late fee to be capped at Rs 500 per return filed between 1st July 2020 and 30th September 2020, whereas Nil return attracts no late fee.
52/2020
February 2020 – April 2020Waived off completely if the filed before the staggered specified dates of June-July 2020.32/2020
October 2018 onwardsReduced Late fee**76/2018
July 2017 -September 2018Reduced Late fee**
If filed beyond 31st Mar 2019
76/2018
July 2017 -September 2018Waived off completely**
If filed between 22nd Dec 2018 to 31st Mar 2019
76/2018
October 2017 onlyWaived off completely**
For GSTR-3B submission made but not filed due to a technical glitch
41/2018
October 2017-April 2018
GSTR-3B was yet to be filed by those who submitted TRAN-1 on the GST portal, but could not file it by 27th Dec 2017.
Waived off completely**
Condition to be satisfied: Such registered persons have filed the declaration in TRAN-1 on or before the 10th May 2018 and the return in GSTR-3B for each of such months, on or before the 31st May 2018
22/2018
October 2017 onwardsReduced Late fee**
Condition to be satisfied:If the date of filing was before 22nd December 2018
64/2017
July 2017 -September 2017Waived off completely**
Condition to be satisfied: If the date of filing was before 22nd December 2018
28/2017 and 50/2017

GSTR-4 (Annual)

Applicable Return Period/sApplicability of Late feeLink to Notification
FY 2021-22 onwardsMaximum late fee that can be charged will be restricted to Rs.500 per return for nil filing and Rs. 2,000 for other than nil filing.21/2021
For FY 2019-20 for those filing GSTR-4 from UT of LadakhThe late fee is waived if return is filed between 1st November 2020 and 31st December 2020
93/2020

GSTR-4 (Quarterly)

Applicable Return Period/sApplicability of Late feeLink to Notification
Quarters from July 2017 to March 2020Maximum late fee is restricted to Rs.500 per return if the return is filed between 22nd September 2020 and 31st October 2020.67/2020
July 2017 -September 2018Reduced Late fee**
If filed beyond 31st Mar 2019
77/2018
July 2017 -September 2018Waived off completely**
If filed between 22nd Dec 2018 to 31st Mar 2019
77/2018
October 2017 to December 2017Waived off completely**
GSTR-4 filed within due date, but late fee erroneously levied on GST portal
41/2018
July 2017 onwardsReduced Late fee**73/2017

GSTR-5

Applicable Return Period/sApplicability of Late feeLink to Notification
July 2017 onwardsReduced Late fee**5/2018

GSTR-5A

Applicable Return Period/sApplicability of Late feeLink to Notification
Returns for July 2017 onwards filed on or after 7th Mar 2018Full Late fee applicable^13/2018
July 2017 onwardsReduced Late fee**5/2018

GSTR-6

Applicable Return Period/sApplicability of Late feeLink to Notification
July 2019Waived off completely for for taxpayers in certain districts of the flood-affected States and all districts of J&K41/2019
For any tax period prior to January 2018Completely waived off**41/2018
July 2017 onwardsReduced Late fee**
No late fees for the delay in filing a Nil return
7/2018

Note: Rest of the returns like GSTR-7, GSTR-8, GSTR-5A 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.

image

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.

image

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:

ParticularsInterest
Tax paid after due date*18% p.a.
Excess ITC Claimed or excess reduction in Output Tax24% p.a.

* 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.

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