Do you know if you have received a notice from the GST department to pay the interest on delayed payment of GST, what action is to be taken?
Are you wondering about the easy-to-use process and guidelines?
This article will give you detailed information on How to pay interest on late payment of GST?
Let’s dive in!
How to pay interest on late payment of GST?
GST Council has set a few guidelines and regulations for proper functioning and disciplined working of all the procedures.
In case of late payment of GST, you need to pay interest and the government will also send a notice regarding the same.
There are a few reasons why you can receive notice:
- After the date of due, the GST return for any tax period has been filed.
- Documents claiming ITC have been claimed after the prescribed time limit for claiming ITC has passed.
The government sends this notice to taxpayers to inform them about non-payment of GST.
There is a simple calculation by which you can calculate the amount of interest levied. Interest calculation depends on the number of days delayed from the due date.
For example
Tax liability – 2000
No. of days delayed- 1
Interest- 2000 X 18 X 1 / 100 X 365 = Rs. 0.98 per day
Payment of the equivalent tax amount along with interest must be made to reverse an ineligible ITC notice.
You need to follow the below steps to pay the interest:
Step 1: Log in to the GST portal. And enter your credentials.
Step 2: Now, Go to Services > User Services > My Applications.
Step 3: To submit a new application, you must first press ‘ Intimation of Voluntary Payment – DRC-03 ‘.
Step 4: Select ‘Voluntary’ under ‘Cause of payment’ since these notices have arrived without any SCN numbers.
Step 5: Select the section number.
Step 6: Relevant ‘Financial year’, ‘From’, and ‘To’ dates need to be input.
Step 7: Payment of tax, interest, penalty, etc needs to be entered.
Step 8: Enter the amounts and a challan will be created.
Step 9: After this, select the authorized signatory name and click on ‘Create Challan’.
Step 10: Based on the mode of payment, the relevant steps for payment can be followed.
Step 11: Verify the details present, click on the verification checkbox, select the name of the authorized signatory and click on ‘File’.
Afterward, you will receive a confirmation message to either file with DSC or file with EVC.
Then a success message with the ARN will be displayed
How do I pay my GST penalty Online?
Late fees should be paid in cash. However, you cannot use the Input Tax Credit (ITC) available in the electronic credit ledger for payment of late fees.
Follow the below steps to make a GST payment on the GST portal:
1. Access the https://www.gst.gov.in/ URL. This will display the GST Home page.
2. log in to the GST Portal.
3. Now, access the generated challan. Then click the Services > Payments > Challan History command.
4. Select the CPIN link to make the payment.
Pro Tip: In case you don’t know the CPIN number, you can select the Search By Date option
5. Now select the Mode of E-Payment.
- For payment through Net Banking
- For Payment through Credit/ Debit Cards
If the payment is successful, you will be re-directed to the GST Portal where the transaction status will be displayed. Then the payment receipt is displayed.
How do I file my DRC 3 interest payment?
Follow this step-by-step guide to make payment against the liability (tax, interest, and penalty) based on self-ascertainment of tax and on ascertainment of tax by Tax Officer:
1. log in to the GST Portal and Click the Services > User Services > My Applications option.
2. From the Application Type drop-down list, select the Intimation of Voluntary Payment – DRC – 03. Then click the NEW APPLICATION button.
3. Payments made voluntarily or against the show cause notice (SCN) or statements or intimations of tax ascertained are displayed on the GST DRC-01A form.
4. From the drop-down list, select the Cause of Payment.
- In the Case of Voluntary Payment- The payment date is auto-populated and cannot be edited.
- In the Case of SCN-
- Select Manual Entry from the drop-down list of SCN Reference Numbers and enter the SCN Reference Number.
- Select the SCN Issue Date using the calendar (Note: SCN Issue date should be within the last 30 days.)
- In Case of Annual Return
- In Case of Reconciliation Statement- Select Cause of Payment as reconciliation statement from the drop-down.
- In Case of Intimation of Tax ascertained through DRC-01A
- Select the Intimation Reference Number from the drop-down.
- Select the Issue Date using the calendar.5. Select the Section Number from the drop-down list.
5. From the drop-down list, select the Section Number.
6. Financial Year, From date, and To Date for the Overall tax Period from the drop-down list should be selected.
7. Enter the Details of the payment made including interest, penalty, and others.
8. Scroll towards the right-hand side to enter more details.
9. After this Voluntary Payment page is displayed. Here enter the Details of the payment made including interest, penalty, and others.
10. Finally click the PROCEED TO PAY button.
- Liability Details
- Cash Ledger Balance- Scroll to the right to enter the amount to be paid through cash against the liability.
11. Check the Verification checkbox and enter the Name of Authorized Signatory and Place. Click the Create Challan button. Fill in the necessary details.
How much is the penalty for late GST?
Penalty for late GST:
| CASE | CGST | SGST | |
| In case of any tax liability | 25 per day | 25 per day | Maximum of Rs. 5000 |
| In case of Nil tax liability | 20 per day | 10 per day |
How do I pay GST arrears?
Login to the GST portal and enter your credentials. Follow these quick steps:
Services → E-payment → Create Challan
You can also check the status of the challan by clicking on Track Challan Status.
FAQ: How to pay interest on late payment of GST?
When can you charge interest on late payments?
You can charge interest only when your invoice becomes overdue.
Can interest be charged on GST?
In case you failed to pay GST within the period, then interest can be charged.
Wrapping Up
We sincerely hope that you have a complete understanding of How to pay interest on late payment of GST.
Furthermore, feel free to reach out to us, and we would love to resolve all your queries.