GST Late Fee & Penalty For Late GST Return

Good and Services Tax or GST, an indirect tax used on the supply of goods and services was introduced in 2017. Since then, this new taxation regime has gone through several changes. Taxpayers have faced confusion due to these amendments resulting in deadline extensions to file returns and fewer taxpayers following the return filing process. Because of this reason, the GST return filing process has been strictly enforced by marking the penalty for late fees and interest on late payment of GST dues.

This article presents a comprehensive guide to the latest announcements on late fees, interest charges on GST returns and more.

What is GST Late Fees

According to the GST laws, a late fee is the amount of money charged in case there is any delay in filing the GST returns prior to the deadlines. The amount of penalty depends on the number of delayed days and is charged for each day from the due date.

The amount of late fee has to be paid in cash only. The Input Tax Credit or ITC available in the electronic credit ledger as a mode of payment for GST late fees cannot be used by taxpayers.

The late fee is also imposed in case there is any delay in filing nil returns even when there is no sale or purchase and no GST liability to proclaim in the GSTR-3B.

The late fee amount is calculated for the number of delayed days from the due date. For instance, a GST return was filed in GSTR-3B on 23rd January 2021 which is 3 days after the imposed due date – 20th January 2021. Thus, the amount for late fees will be calculated for 3 days which needs to be submitted in cash only.

In addition, the GST portal is currently charging a late fee on returns, like GSTR-3B, GSTR-4, GSTR-5, GSTR-5A, GSTR-6, GSTR-8, GSTR-7 and GSTR-9.

Penalty Charges for Delay in GST Return

In cases where the tax returns are not filed by the taxpayers within the due dates provided, they have to pay a late fee of Rs. 50 per day which means Rs. 25 per day in each case of CGST and SGST in the cases of tax liability.

In case of nil tax liability, it is Rs. 20 per day which means Rs. 10 per day in each case of CGST and SGST. However, the maximum late fee is Rs. 5,000 from the due date to the date when the taxpayers finally filed the returns.

Late Fee in GST

The late fee in GST is calculated considering the type of return filing. It is classified into three categories:-

Late Fees for Non-Annual GST Returns

If the taxpayer fails to file the GST return within the deadline, he or she has to pay a late fee of Rs. 100 per day under the CGST and the SGST Act.This means they have to pay a total amount of Rs. 200 per day. The late fee amount keeps increasing every day until the taxpayer files the returns and pays the GST late fees. As mentioned above, the late fee amount does not go beyond Rs. 5,000. In addition, the late fee is applicable for inter-state supplies as well.

Late Fees for Annual GST Returns

The late fee for annual GST returns is the same as it is for non-annual GST returns. It is Rs. 100 per day under CGST Act and the same under the SGST Act. Therefore, the taxpayer has to pay a total amount of Rs. 200 per day. For annual GST returns, the maximum late fee amount is 0.25% of the taxpayer’s total turnover for the particular financial year.

Late Fees for Filing NIL Returns

It is mandatory to file a NIL return even if there is no GST amount to be paid. If there is a delay in the filing of NIL returns, a late fee of Rs. 50 is levied per day under CGST Act and the SGST Act separately amounting to a total penalty of Rs. 100 per day. However, as per the recent amendments, this penalty amount has been reduced to Rs. 20 per day which means Rs. 10 per day under CGST Act and the SGST Act.

Interest on Late Payment of GST

Interest is imposed upon the GST payments after a given due date. Taxpayers usually have to pay interest in the following scenarios:–

• If there is a delayed GST payment after the due date, an interest of 18% p.a.is levied from the following day of the due date.
• In case the taxpayer avails excess ITC (Input Tax Credit) or reduces excess output tax liability, an interest of 24% p.a. is imposed.

For instance, your tax liability is Rs. 2,000 and the tax has not been paid on time for a particular month. In such a case, while paying tax a day after the due date, the calculation for the interest would be 2000*18/100*1/365 = Rs. 0.98 per day. If it is delayed further, an interest of the same amount will be levied per day.

Calculation of Late Fees

Given below are the processes of late fees calculation for GSTR-3B, GSTR-1, GSTR-9, GSTR-9A and GSTR-10.

Late Fees for GSTR-3B

The late fee for GSTR-3B for NIL returns is Rs. 20 per day (Rs. 10 under CGST Act and Rs. 10 under SGST Act). It is Rs. 50 per day in other cases (Rs. 25 under CGST Act and Rs. 10 under SGST Act). The return cases with no sales but purchases are also considered as Nil returns. The late fee amount does not go beyond Rs. 10,000 for every return which is Rs. 5,000 under CGST Act and SGST Act separately.

Late Fees for GSTR-1

The late fee amount for GSTR-1 is Rs. 200 per day which is Rs. 100 for CGST and Rs. 100 for SGST. Currently, there is no late fee for GSTR-1 as per government’s order.

Late Fees for GSTR-9 and GSTR-9A

The late fee amount related to GSTR-9 and GSTR-9A is Rs. 200 per day which is Rs. 100 under CGST Act and for SGST Act, separately. The maximum late fee amount for GSTR-9 and GSTR-9A is 0.50% of the taxpayer’s total turnover for the particular financial year (0.25% under CGST Act and 0.25% under SGST Act).

Late Fees for GSTR-10

The late fee amount for GSTR-10 is Rs. 200 per day (Rs. 100 under CGST Act and Rs. 100 under SGST Act). For GSTR-10, there is no maximum limit. The taxpayer has to pay the late fees to enable the filing of his or her return.

GST Interest Calculation

Interest is levied on the late payment of GST liability after deducting the ITC or Input Tax Credit Claims. The taxpayers entitled to pay the interest on GST late payment are the ones who:

• Make a payment of the delayed GST including those paying CGST, SGST or IGST after the due date.
• Claim the excess input tax credit.
• Diminish excess output tax liability.

Applicable GST Interest Rates

In case the taxpayer does not pay GST within the due dates of filing the return, he or she has to pay the interest at the following rates:–

• 18% per annum for the tax paid after the due date.
• 24% per annum for the excess ITC claimed or the excess reduction in output tax.

 Please note that a few amendments have been made on the occasion of the pandemic for a few periods. Please check the GST calendar for more details.

 The interest will be calculated from the following day of the due date. For instance, if someone misses out on making a tax payment of Rs. 10,000 for December 2021, for which the due date was 20th January 2022, they have to pay the late fee on 20th February 2022. Thus, the calculation of the interest for the delay of  31 days (from 21st January till 20th February) would be as follows:

 Rs.10,000 * 31/365 * 18% = Rs.153

 Therefore, it is essential to make tax payments and the filing of GST returns within due dates.

How to Deposit Late Fees of GST?

The GST portal automatically calculates the amount of late fees levied while the taxpayer is submitting the GST returns. It has to be paid separately in cash for CGST and SGST in different electronic cash ledgers. The taxpayer cannot file the GST return until the late fee is paid. The late fee for a particular month comprises the one imposed for the previous month due to a delay in the return filing. In addition, the interest is levied on the late payment or non-payment of GST.

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