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A late fee is an amount charged for filing GST Returns after the deadline, as per GST Law. 

When a GST Registered business exceeds the deadlines for filing GST Returns, a minimum late fee will be charged for each day of the delay.

The amount of the late fee is determined according to the number of days that passed from the due date.

If you found it difficult to calculate late fees and interest on GST, then this article is for you. 

Let’s deep dive into the topic of  “How to calculate Late Fees and Interest on GST”.

What is the late fee for GSTR 3B?

As per Section 47 of the CGST Act, late fees are a daily penalty levied for filing GST returns late. Only cash is allowed for payment of the late fee. Taxpayers are unable to use the Input Tax Credit, or ITC, which is available in the electronic credit ledger, as a method of paying for GST late fees.

Even though there are no sales or purchases and no GST liabilities to disclose in the GSTR-3B, the late fee is still charged if nil returns are filed late.

Late fees for GSTR-3B can be paid in the subsequent month. You cannot file the current month’s return before paying the previous month’s late fees.

ParticularsNormal Return FilersNil Return Filers
CGST Act₹ 25₹ 10
SGST/UTGST Act₹ 25₹ 10
IGST Act₹ 50₹ 20

However, the maximum late fee for each return is Rs. 10,000, which is Rs. 5,000 under the CGST Act and SGST Act separately.

How is the GST late fee calculated?

According to the GST Acts, the late fee under both the CGST and SGST Acts must be paid for intrastate supplies in the following way:

Late Fees for GSTR-3B

Name of the ActLate fees for delay
Central Goods and Services Act, 2017₹ 25
State Goods and Services Act, (or) Union Territory Goods and Services Act, 2017₹ 25
Total late fees per day₹ 50

Up till May 2021, the law sets a maximum late fee of Rs 10,000. 

From the June 2021 return period onward, the maximum late fee was reduced, as stated in the previous section.

Name of the ActLate fees for delay
CGST Act, 2017₹ 10
SGST/UTGST Act, 2017₹ 10
Total late fees per day₹ 20

Late Fees for GSTR-9 and GSTR-9A

The late fee for GSTR-9 and GSTR-9A is as follows: 

Name of the ActLate fees for delay
CGST Act, 2017₹ 100
SGST/UTGST Act, 2017₹ 100
Total late fees per day₹ 200
Late Fees for GSTR-9 and GSTR-9A

A maximum late fee of 0.25 percent of the financial year’s turnover is being imposed by law.

Late Fees for GSTR-10

The late fee for GSTR-10 is as follows: 

Name of the ActLate fees for delay
CGST Act₹ 100
SGST/UTGST Act₹ 100
Total late fees per day₹ 200
Late Fees for GSTR-10

How do you calculate late payment interest?

After deducting input tax credit claims, or ITCs, interest is imposed on the late fee of GST liability. The taxpayers who are eligible to pay the interest on late fees of GST are those who:

  • Make a delayed GST payment, especially those who paid CGST, SGST, or IGST after the deadline.
  • Make a claim for the extra input tax credit.
  • Reduce the amount of extra output tax owed.

If you fail to pay the GST according to the deadlines for filing the return, you can calculate late payment interest at the following interest rates:

ParticularsInterest
Tax paid after the due date18%
Excess ITC claimed or excess reduction in output tax liability24%
How do you calculate late payment interest

What happens if a payment is not made in 180 days under GST?

The ITC will be reversed and will be charged together with interest if that payment is not made within 180 days as per GST.

What is the late fee for the GST annual return?

The late fee for the GST annual return is ₹ 200. That is ₹ 100 for the CGST Act and ₹ 100 for the SGST Act. 

How do I avoid late fees on GST?

  • The essential thing to remember is to pay your GST on time or before the due date to avoid late fees and interest under GST.
  • Put reminders for different dates to avoid. Once your monthly invoicing process is complete, submit your GST as soon as possible.
  • Don’t wait until the last day to file your GST.
  • Apply for cancellation registration since the effective date of registration if no sales or purchases are made to avoid the late fee. File the GSTR 10 (final return) and apply for new registration in case you want to start the business now.
  • One should always keep checking the status of filing, in case the return filing is handled by a 3rd party or consultant. This can be checked from the GSTIN portal itself using the mentioned path.

FAQs: How to calculate Late Fees and Interest on GST

1. What if GST returns are not filed for 2 years?

As per GST law, there will be late fees for each day that you fail to file the GST returns that are required. In addition, the interest is charged at a rate of 18% annually on any unpaid taxes, if any.

2. Can we pay the GST penalty in installments?

Yes, as per Section 80 of the CGST Act, you can pay the GST penalty in installments. 

3. What is the highest late fee allowed by law?

A maximum late fee of Rs 10,000 has been imposed under legislation until May 2021. According to this, the Government may levy no more than Rs 5000 for each return filed in accordance with each Act.

4. What happens if an invoice is late?

If an invoice is late, you have the right to impose late fees on unpaid invoices.

Conclusion 

We hope this article will help you better understand “how to calculate late fees and interest on GST.” 

If you have any other queries, do let us know in the comments section below, and feel free to reach out to our team.

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