Understanding GST Return Late Fees and Interest

Understanding GST Return Late Fees and Interest

Filing GST returns on time is crucial for businesses registered under the Goods and Services Tax (GST) regime in India. Delays in filing these returns attract late fees and interest charges, which can add a significant financial burden.

What are Late Fees?

Late fees are levied by the government for non-compliance with GST return filing deadlines. These fees are calculated on a per-day basis, starting from the day after the due date and continuing until the return is filed. Importantly, the late fee cannot be paid using Input Tax Credit (ITC) available in the electronic credit ledger.

The GST Return Forms and Late Fee Structure

• GSTR-3B: This is the most common return filed by most GST-registered businesses. It summarizes the outward and inward supplies made during a month. The late fee for GSTR-3B is:
• Rs. 20 per day (Rs. 10 for CGST and Rs. 10 for SGST) for filing a nil return (meaning no transactions but with acquisitions).
• Rs. 50 per day (Rs. 25 for CGST and Rs. 25 for SGST) for any other scenario.
• GSTR-1: This return captures details of all outward supplies made during a month. While the late fee for GSTR-1 is Rs. 200 per day (Rs. 100 for CGST and Rs. 100 for SGST), currently, the government does not accept late fees for this form.
• GSTR-9 and GSTR-9A: These annual returns provide a comprehensive view of a business's GST transactions throughout the year. The late fee for these returns is a maximum of Rs. 200 per day (Rs. 100 for CGST and Rs. 100 for SGST), subject to a cap of 0.50% (0.25% for CGST and 0.25% for SGST) of the taxpayer's turnover.
• GSTR-10: This return is filed by companies registered under the Composition Scheme. The late fee for GSTR-10 is Rs. 200 per day (Rs. 100 for CGST and Rs. 100 for SGST) with no upper limit on the penalty amount.

Important Points to Remember

• There is a maximum limit on the late fee that can be charged for each return type. For GSTR-3B, the maximum is Rs. 10,000 (Rs. 5,000 for CGST and Rs. 5,000 for SGST).
• Businesses cannot file the GSTR-3B for the current month unless the late fee for the previous month's return is paid.
• Late fee payments for GSTR-3B for a particular month are levied in the subsequent month.

Interest on Late Payment of GST

Apart from late fees, businesses are also liable to pay interest on any outstanding tax dues after the due date. This interest is calculated at a rate of 18% per annum from the day after the due date until the payment is made.

GST Payment Rules

• Payments for tax, interest, penalty, and fees made through online banking, credit card, NEFT, or RTGS are credited to the electronic cash ledger. Any outstanding interest, fee, or liability in the taxpayer's account will be automatically deducted from this balance.
• Payment for the GST PMT-06 form is made via challan, which is valid for only 15 days. A Challan Identification Number (CIN) is generated upon successful payment. If the CIN is not generated, taxpayers can file Form GST PMT-07.
• Online fee transfers are credited to the taxpayer's account the next day if initiated after 8 pm.
• While physical challans are no longer accepted for GST payments, challans can still be generated from the gst.gov.in portal for all tax, interest, penalty, and fee payments.
• Challan payments below Rs. 10,000 can be made over the counter at designated banks using cash, cheques, or demand drafts. Payments exceeding Rs. 10,000 must be made digitally.