December 3, 2020

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Late Fees and Interest On GST Returns

According to the Goods or Services Tax rules, the late fee is the money paid by taxpayers for the delay in filing their GST returns. But it can also be identified as an unpaid fine, too. Often, remember that this late fee will increase with and day’s extension after the due date has expired on a per-day basis.

Late fees and interest rates are vital components of GST payment and are usually charged by both firms and taxable individuals, whether there is a pause in submitting or filing their GST returns before the due date, deliberately or unintentionally. Delayed submission of Form GSTR-3B and Form GSTR-11 for late payments are only credited to taxpayers who do not have an external supply or are entitled to file a Zero Return and to taxpayers who are liable for paying GSTR-1  In this article, we will learn about Late Fees and Interest On GST(Goods Or Services Tax) Returns.

Late fee for overdue or non-filing returns from GST

The number of late payments depends upon the number of days after the due date of the delay. GSTR-3B returns are to be forwarded to GSTR-3B on 23 January 2020, three days after the prescribed due date, i.e. 20 January 2020. Over a three-day period, the late payments will be averaged and will usually be charged only in cash.

If during the prescribed due dates, a business authorized under GST fails to file its GST returns, a certain amount is charged in the form of late fees. This late fee also has to do with delays in filing returns from Zero. For example, while there are no estimates in GSTR-3B for the month of December 2019 to declare revenues or acquisitions, it is also compulsory for the company to send this return. 

Goods os services rax penalty for late filing:-

A person fails to provide details by the due date on outward or inward content, monthly return, or final return: the GST penalty for late filing is INR 100 for every day during which the failure continues, up to a maximum of INR 5,000. An entity fails to have the annual return by the due date: the GST late filing penalty is INR 100 on every day after which the default persists, subject to a cap of a quarter percent of the person’s turnover in the state where he is registered.

Interest Late Payment Rate Under GST – Goods Or Services Tax

Although the liability and/or interest rates for the crimes in place have not yet been started, the penalty for the late payment of GST has been laid down as follows:

  • The tax is not collected by a person entitled to pay tax: the interest on the tax owed will be assessed at an interest rate of 18% on the first day on which the tax was due to be imposed.
  • A person makes an undue or excess claim on an input tax credit or an undue or excess reduction on an output tax liability: an interest rate of 24 percent on an undue or excess claim or an undue or excess reduction.
  • The purchaser of the service shall not within 180 days of the date of issuance of the supplier’s invoice, refund the remainder of the value of the item to the service provider along with the tax owed thereon: an interest rate of 18% shall be applied to the loan of the recipient on the sum due.

Interest Rates Pursuant to GST

Generally, the interest rate refers to the late-paying of the due GST refund. The interest rate is then expected to be paid by each taxpayer who:-

  • Delays in the payment of GST, i.e. after the due date, the payment of GST
  • Claims from Surplus Input Tax Credit (ITC)
  • Reduces excess responsibility for the tax on output
  • At the time of registration, GSTR-3B and GSTR-4 refunds actually have to be paid.
  • The taxpayer shall pay the following interest rates if the taxable person and/or company fails to file its GST report within the specified date of filing of the return:
  • The interest rate charged will be 18 percent annually if the tax were collected after the due date.
  • The amount of interest charged will be 24 percent per annum if excess ITC is claimed or excess output tax is reduced.

Paying GST Return Late Fees and Interest

As the late fees are paid on the basis of the number of days on which the taxpayer has not submitted a GST record, the value of the late fee due on filing the GST return will be determined automatically by the GST portal.

The late return fee for GST is to be collected individually in cash in separate electronic cash ledgers for CGST, SGST, and IGST. Hence without paying a late charge, the taxpayer would not be allowed to file his or her GST return. The late fee for the present month excludes the late fee paid for the prior month because of the delay in filing the GST return. In addition, late or non-payment of GST returns will also result in interest.