Late Fees and Interest on GST Return

Introduction to Late Fees under GST

As per the GST laws, a late fee is an amount charged for a delay in filing the GST returns. 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 the electronic credit ledger for payment of late fees.

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 returns in GSTR-3B are 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 they should be deposited in cash. 

Amount of late fees applicable

Note that the maximum late fees have been rationalized from the month of June 2021 and the quarter ending June 2021.

As per the 43rd GST Council meeting’s outcome, a maximum late fee is reduced to the following amounts based on the 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, a maximum late fee is fixed based on an annual turnover slab, as follows:
  • If the annual turnover in the previous financial year is up to Rs.1.5 crore then the late fee of a maximum of 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, a late fee of a maximum of Rs.10,000 (i.e Rs. 5000 per CGST and SGST) can be charged.

Additionally, the late fee has been rationalized 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.

How to deposit Late fees with the Government

The amount of the Late fee applicable will automatically be calculated by the GST portal while submitting the GST 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.

The late fee for the month includes the previous month’s late fee charged due to a delay in filing 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 the return Interest at the following rates has to be paid:

Particulars	Interest
Tax paid after due date*	18% per annum
Excess ITC Claimed or excess reduction in Output Tax	24% per annum