Interest on GST Late Payment

Introduction

The administration will impose late fees and interest on businesses who fail to file a GST (Goods and Services Tax) return or make timely payments of their tax obligations. 

Therefore, it’s critical for organizations to comprehend these elements. This comprehensive article includes all of the most recent announcements on interest charges and late fees under the GST!

Definition and Use of Interest and Late Fees for GST Returns

The payment for filing GST returns after the deadline is the GST return (GSTR) late charge. A registered business is required to pay a statutory late charge if it fails to file its GSTR by the deadline. 

The amount of this daily late fee is calculated for each day that the payment is past due. The taxpayer is not permitted to use the Input Tax Credit (ITC) provided by an electronic credit ledger to cover the late fine. The taxpayer is required to pay the late fine in cash instead.

The payment options for different return types and systems may differ, even though late fines and interest are significant consequences of GST non-compliance. 

Only when there is a delay in the submission or filing of GST returns are late fees assessed. But in addition to late payments, interest is also assessed for overusing the ITC or underpaying taxes.

Most Recent Information Regarding GST Payment

08 May 2023

Indian Bank Limited and South Indian Bank Limited are the two new banks that the GSTN has added to its network of partner banks. This brings the total number of banks that accept GST payments to 23.

25 November 2022

The availability of 21 banks for the payment of GST tax is a significant update. Continue Reading

7 July 2022

To address the matter of elucidating the penalty and demand provisions under the CGST Act, 2017, the CBIC has released circular no. 171/03/2022. Continue Reading

5 April 2022

The Telangana bench’s Authority of Advance Ruling (AAR) has mandated that the supply value, which includes interest for late payment, be subject to Goods and Services Tax (GST). 

26 December 2021

TANGEDCO has begun collecting INR 1 crore in overdue GST taxes from its Indian clients. The corporation has taxed numerous categories at an 18% rate. There are seventeen categories in all, such as duplicate bill costs, application fees, inspection and reconnection fees, etc.

How is interest calculated in a GST context?

After deducting input tax credit claims from the net tax liability, interest is charged on the GST liability that is not paid on time. All taxpayers who must pay the interest include those who:

1. Makes an overdue payment of GST, meaning that they pay CGST, SGST, or IGST.
2. Makes a claim for the excess input tax credit.
3. Lowers the obligation to pay surplus output taxes

Interest is assessed on the GST payment if the taxpayer is unable for any reason to make the timely GST payment. GST payments that are made after the deadline will incur interest at the rate of 18% annually.

For example: Interest will be computed from the June 20th due date till the payment date if the taxpayer is unable to pay the GST amount (let’s say INR 50,000) by July 10th. Therefore, the interest for the 20-day delay would be Rs. 493.

(Rs. 50,000 x 20 days x 18% yearly interest on late GST payment) / 365 days

Fees for Missing the GST Due Date

If a taxpayer fails to file their returns by the designated deadlines, they will be charged a late fee of up to Rs. 5000/-. 

This fee will be charged from the specified due date until the actual date the returns are filed, and will be equal to Rs. 50/day (or Rs. 25 per day in the case of CGST and SGST, if there is any tax liability) or Rs. 20/day (or Rs. 10/-day in the case of nil tax liability).

Crucial Details Regarding GST payment for freelancers

According to the current GST law, anyone offering services that are subject to taxes must register with the state as a hub of that service. 

If average annual turnover surpasses ₹20 lakh (₹10 lakh in certain states, such as the Northeast), that person will be eligible to apply for freelance work upon the aforementioned exceeding limit.

Depending on the type of service they provide, the freelancer will be subject to 18% GST, same as other service providers. The importance of comprehending late fines and interest associated with GST returns cannot be emphasized in the constantly changing taxes landscape. 

In the context of GST, these monetary fines are a vital reminder of how important compliance and timeliness are. These are strong incentives to meet deadlines and swiftly satisfy tax responsibilities rather than just being monetary deductions.

Understanding the nuances of these fees as taxpayers gives us the ability to confidently and sensibly negotiate the tax code. Therefore, filing GST returns on time is essential to avoiding late GSTR and interest fines. 

Meeting deadlines promotes effective tax administration and helps avoid financial hardships. To guarantee seamless company operations and compliance with legal obligations, exercise caution and file your GST returns on time.

Ready to file your Income Tax Return? Whether it’s ITR-1, ITR-2, ITR-3, ITR-4, ITR-5, ITR-6, or ITR-7, we’ve got you covered! Need to respond to a tax notice or handle TDS filings? We can help with that too. 

Get Your GST Compliance Sorted with Lawgical Adda! Whether it’s GST Registration, GST Return Filings, GST Annual Returns, GST LUT Filings, or GST Registration Cancellation, we’ve got you covered! 

Lawgical Adda’s solution provides end-to-end management of corporate governance and secretarial compliances, encompassing every phase of the entity life cycle. Don’t hesitate to get in touch with us if you want more information on the compliance standards and to outsource them to us.