Thank you for your response
Thank you for your response
Our representative will get in touch with you shortly.
The GST regulations necessitate taxpayers to pay interest on late payment of GST liability. It is the responsibility of the taxpayer to calculate interest on late payments. One must accurately calculate interest to ensure proper discharge of interest liabilities as per law. To facilitate the taxpayers, the interest calculator functionality in GSTR-3B has been introduced.
The GST Network (GSTN) has brought various changes to the IT infrastructure for the indirect tax regime. One of the changes is the introduction of the interest calculator. The interest calculator assists taxpayers in computing interest for belated tax payments.
This new functionality shall automatically calculate the interest payable on late tax payments based on the values entered in GSTR-3B for a specific tax period. The interest will relate to late payment of net output tax liability, i.e., the amount of tax paid by way of debit to the electronic cash ledger. Taxpayers can verify and discharge the correct interest liability as per law. The interest on late payment will reflect in the GSTR-3B of the subsequent period.
Section 50 of the CGST Act, 2017 asserts that interest will be levied on late payment of GST liability for a particular period. Interest is levied on net GST liability after reducing eligible input tax credit from total output tax. This implies that interest will be calculated on the amount paid by cash to discharge the GST liability.
Interest calculation will begin from the day succeeding the due date of filing till the date of payment of tax. The Act states that the interest rate shall be a rate as notified by the Government and shall not exceed 18% p.a. Currently, the rate of interest on late payment of tax liability has been notified to be 18% p.a.
Before this functionality, taxpayers were required to self-assess their interest liability on delayed tax payment and discharge their liabilities. This proved difficult since taxpayers could not accurately estimate their interest liabilities. There were also situations where certain taxpayers would evade payment of this interest because the interest computation was purely on a self-assessment basis.
Interest liability with respect to supplies made during the current tax period will solely be computed on the tax paid by debiting the electronic cash ledger. However, the interest for the previous tax liabilities declared in GSTR-3B of a particular period will be computed for the entire liability. The following changes are deployed on the GST portal for the proper discharge of GST liabilities:
Interest Liability = Tax liability × (Number of days from due date till actual date of filing/Number of days in a year) × Interest rate
The taxpayer can verify the auto-computed interest and confirm the total interest. The taxpayer can also edit the interest computed and proceed to discharge the liability. But on downward editing of the interest values, a warning message will be displayed by the system. Despite this, the taxpayer will be allowed to proceed with filing the return.