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Interest On Late Payment Of GST

Interest On Late Payment Of GST (With Rates)

Every registered individual should file the GST returns within the prescribed dates to avoid any late fees and interest.

In case you are unable to file GST returns within the due dates, a late fee along with the interest will be charged on GST.

The interest will be charged at 18%. It is necessary to calculate the Interest from the next day after the tax was due.

Do you need help understanding the concept and calculation of Interest on late payment of GST?

Then you are at the right place.

This article has covered all the latest announcements regarding Interest calculation.

Interest is charged as follows:

Delayed Payment of GST18% per annum
Undue or Excess reduction of Tax Liability24% per annum
Undue or Excess claim of ITC24% per annum

Interest is payable on the GST liability at 18%. Based on the GST amount, interest rate, and period of delay, the interest amount would be determined.

On the following occasions, Interest on GST Late payment arises-

  1. When a delayed payment is done after the due date of GST Return
  2. When excess Input Credit (ITC) is claimed.

Pro Tip:  The interest rate is calculated based on the gross GST liability.

How much interest is on delayed payment of GST?

GSTR 3B return furnished after due date – 

Interest will be payable @ 18%.

Proviso to section 50(1), interest will be payable only on the portion of the tax paid by debiting an electronic cash ledger.

The return is furnished after the commencement of proceedings either under section 73 (i.e., non-fraud cases) or under section 74 (i.e. fraud cases) – 

Interest will be payable on the gross amount of tax payable ( tax paid by debiting electronic cash ledger + tax paid by debiting electronic credit ledger)

Interest on input tax credit wrongly availed – 

Interest will be payable at @24% (@18% if notified) when the input tax credit is utilized. No interest is payable if input tax credit is reversed before utilization.

How is GST interest calculated?

Getting into penalties and late filing interests on GST can be avoided by filing your GST Returns on time.

The GST interest rate is 18%.

Interest is calculated on net GST liability after reducing eligible input tax credit from total output tax.

As of the day following the due date, interest must be calculated on the due date. It is therefore important to make tax payments and file GST returns on time.

Is there any interest in the late filing of GSTR 3B?

The government of India has levied late fees on taxpayers who are unable to pay GST on the due date. Fees for various GST returns are as follows:

ParticularsLate Fees
1. GSTR 3B, GSTR 1, and GSTR 4 (If there are Sales)Rs 50 per day up to a maximum of Rs 10,000
2. GSR 3B, GSTR 1, and GSTR 4 (Nil Return)Rs 20 per day up to a maximum of Rs 10,000
3. GSTR 9 & GSTR 9ARs 200 per day up to a maximum of 0.5% of turnover
4. GSTR 10 (Final Return)Rs 200 per day

How do you calculate late payment interest?

To calculate the interest:

Debt amount x Number of days x Daily late payment interest rate 

The calculation of interest is on Gross GST Liability.

For example:


Total sales amount- 100000

GST payable for Jan – 18000

ITC for Jan-                  3000

Due date-                   20 Feb

Return filed on-         1 March


No. of delay in days-  10 days (20 Feb1 Mar)

Interest-                       18%

Output GST-                18000

Interest-                      18000 X 18 X 10 / 100 X 365    =   Rs. 88.76

How is interest calculated monthly?

The annual rate is divided by 12 to calculate the monthly interest rate.

In the same manner, the following can be calculated:

  1. To calculate the daily interest rate, divide the annual rate by 360 (or 365, depending on your bank).
  2. To calculate the quarterly rate, divide the annual rate by four.
  3. To calculate the weekly rate, divide the annual rate by 52.

Can interest on late payment of GST be waived off?

In certain circumstances, interest is waived or reduced.

Interest relief has been provided as follows:

1st April 2021 – 9th June 20210%
10th June 2021 – 9th July 20219%
1st May 2021 – 10th July 20210%
11th July 2021- 25th July 20219%

Frequently Asked Questions(FAQs):-

Is GST chargeable on late payment interest?

Interest will be applicable at the rate of 18% if the payment is not done within the due date. 

A rate of 24% interest will be applicable in the case when a taxpayer claims excess of input tax credit or makes a reduction in the output tax liability.

The amount of interest and penalties should only be paid through an electronic cash ledger.

Is it legal to charge interest on late payments?

Yes, it is absolutely legal to charge the interest amount on late payment of GST as it is the guidelines structured by the government of India.

How much is interest on late payment of service tax?

A simple interest rate of 15% per annum is payable on late payment of service tax.  

Wrapping Up

We hope the comprehensive information provided in this article Interest on late payment of GST, will be very helpful for you.

Still, if you have any queries related to the topic, feel free to comment in the comment section below.

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GST Interest Calculator (With Rates)

How To Calculate Late Fees and Interest On GST (With Formula)

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