Late Fees and Interest for GST Returns

Bio

Ankit Rahangdale is a seasoned finance professional with a distinguished background as a Chartered Accountant. Currently, he leads the Finance Department at Pice. With over five years of invaluable experience in the banking and finance sector, honing his expertise through esteemed institutions such as ICICI Bank and Standard Chartered Bank.

25 Aug 24
11 mins

Ankit Rahangdale

08 Mins
25-08-24

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Table of Contents

Understanding Late Fees in GST
Penalties for Late Return Filing
Interest Charges on Delayed GST Payments
Latest Notification on GST Late Fees
Paying Late Fees on the GST Portal
Calculating Interest under GST
Applicable GST Payment Rules for Taxpayers
The Bottom Line

Filing GST returns on time is crucial to avoid late fees and interest charges, ensuring smooth business operations and compliance.
The late fee for GSTR-3B is ₹50 per day for regular returns and ₹20 per day for nil returns, with similar structures for other GST returns.
An 18% per annum interest rate is imposed on delayed GST payments, calculated on the net tax liability after deducting input tax credits.
The GST portal automatically calculates late fees, which must be paid when filing the subsequent month's or quarter's returns.
GST payments can be made through various methods, including internet banking and credit cards, with specific rules for transactions over ₹10,000.

When a registered business fails to file Goods and Services Tax (GST) returns or pay tax liabilities on time, penalties in the form of late fees and interest are imposed by the tax department. According to GST regulations, late fees are incurred for delayed filing of returns, calculated daily until the return is filed.

Additionally, late payment of GST liabilities incurs interest, calculated on the net tax liability after deducting input tax credits, at an annual rate of 18%. Taxpayers are obligated to settle these charges promptly to comply with GST requirements and avoid further penalties.

This blog covers all you need to understand about these penalties for late filing of GST returns, focusing on the late fee for GSTR-3B and such other forms.

Understanding Late Fees in GST

As per GST laws, late fees are penalties imposed for delays in filing returns. These fees accrue daily from the prescribed due dates set by the tax authorities. Even if there are no sales, purchases or GST liabilities to declare in the return, late fees are imposed for the delay in submission.

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This fee is determined based on the number of days of delay from the due date. For instance, if GSTR-3B is filed on 23rd June 2024, which is 3 days after the prescribed due date of 20th June 2024, the late fees will be calculated for these three days and must be paid in cash. As of now, the GST portal applies late fees exclusively to the following returns:

GSTR-3B

Take a look at the following table to find out the late fees for delays in filing Form GSTR-3B:

Name of the Act	Late fees for every day of delay
For Regular Taxpayers:
Central Goods and Services Act, 2017	₹25
Respective State Goods and Services Act, 2017 (or) Union Territory Goods and Services Act, 2017	₹25
Total late fees to be paid per day	₹50
For Taxpayers with Nil Liability:
Central Goods and Services Act, 2017	₹10
Respective State Goods and Services Act, 2017 (or) Union Territory Goods and Services Act, 2017	₹10
Total late fees to be paid per day	₹20

GSTR-4

Below are the late fees applicable for delays in filing Form GSTR-4:

Name of the return	Type of return	Annual turnover in previous year	Maximum late fee under CGST	Maximum late fee under SGST	Maximum late fee
GSTR-4 (FY 21-22 onwards)	Nil return	NA	₹250	₹250	₹500
GSTR-4 (FY 21-22 onwards)	Other than Nil return	NA	₹1,000	₹1,000	₹2,000

GSTR-5

Here are the late fees applicable for delays in filing Form GSTR-5:

Return Type	Late Fees
Nil Returns	₹20 per day
Normal Returns	₹50 per day
The maximum late fee is ₹5,000.

GSTR-5A

If Form GSTR-5A is filed late, the following late fees apply:

Return Type	Late Fees Applicable
Return for Normal Filing	₹200 per day
Return for NIL Filing	₹100 per day

GSTR-6

If you miss the prescribed deadline for filing Form GSTR-6, a fine of ₹50 per day is imposed. For filing a NIL return, the fine remains ₹50 per day with no reduction allowance.

GSTR-8

If the GST return is filed late, a penalty of ₹100 per day under CGST and ₹100 per day under SGST, totalling ₹200 per day, will be charged, up to a maximum of ₹5,000. No late fee is applied to IGST for delayed submission.

GSTR-7

Given below is the late fee structure associated with Form GSTR-7 filing:

Name of the return	Type of return	Annual turnover in previous year	Maximum late fee under CGST	Maximum late fee under SGST	Maximum late fee
GSTR-7 (TDS filing under GST)	NA	NA	₹1,000	₹1,000	₹2,000

GSTR-9

Here is the fee structure applicable to late filing of Form GSTR-9:

Name of the Act	For taxpayers whose turnover is up to ₹5 crore (Late fees for every day of delay)	For taxpayers whose turnover is more than ₹5 crores & up to ₹20 crore (Late fees for every day of delay)	For taxpayers whose turnover is more than ₹20 crore (Late fees for every day of delay)
Central Goods and Services Act, 2017	₹25	₹50	₹100
Respective State Goods and Services Act, 2017 (or) Union Territory Goods and Services Act, 2017	₹25	₹50	₹100
Total Late fees to be paid	₹50*	₹100	₹200
Maximum late fees that can be charged	0.04% of turnover in state or union territory	0.04% of turnover in state or union territory	0.25% of the turnover for the financial year

Penalties for Late Return Filing

When individuals or businesses violate GST regulations by failing to file returns or missing filing deadlines, penalties are imposed as per the GST Act. Late GST payments can result in penalties up to ₹10,000, along with annual interest calculated from the due date to the actual filing date. Non-compliance could also lead to additional penalties such as ITC restrictions, increased tax liabilities and potential legal proceedings.

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Interest Charges on Delayed GST Payments

Interest charges on delayed GST payments in India are imposed to ensure timely tax compliance. Under Section 50(1) of the CGST Act, 2017, taxpayers failing to pay on time face an 18% per annum interest rate. This accrues daily from the due date until the payment.

Latest Notification on GST Late Fees

During the 43rd GST Council meeting in June 2021, a few adjustments were announced regarding late fees and penalties for GST.

In instances where Forms GSTR-1 and GSTR-3B are not filed, the maximum late fee per return amounts to ₹500 (i.e., ₹250 for CGST and ₹250 for SGST).
If the annual turnover of the preceding fiscal year is up to ₹1.5 crore, a late fee of up to ₹2,000 per return may be levied (i.e.,₹1,000 each for CGST and SGST).
In case the turnover is between ₹1.5 crore and ₹5 crore, a maximum penalty of ₹5,000 per return can be levied (i.e., ₹2,500 each for CGST and SGST).
For turnovers over ₹5 crores, a late fee of ₹10,000 applies (₹5,000 each for CGST and SGST).
From FY 2021-22, GSTR-4 late filing fees are standardized: ₹500 for nil filing and ₹2,000 for non-nil filing under CGST notification 21/2021 dated 1st June 2021.
As per CGST announcement 22/2021 dated 1st June 2021, the late fee for GSTR-7 (TDS filing under GST) is capped at ₹2,000, with a reduced daily penalty rate from ₹200 to ₹50 per act, per return.

GSTR 3B Late Fees

GST Return 3-B late fees are charges imposed for filing of return after the due date, varying for normal and nil returns. Take a look at the following table to find out the applicable fee for each taxpayer.

Return Type	Late Fee (Applicable on a Per Day Basis)
Normal Returns	₹50
Nil Returns	₹20

Suppose that the due date for filing GSTR-3B is 20th July and a business files the return on 25th July, the late fee for normal taxpayers would be 5 days * ₹50 = ₹250, whereas, for a nil return filed on the same dates, the late fee would be 5 days * ₹20 = ₹100.

GSTR 1 Late Fees

The table below outlines the late fees applicable for filing Form GSTR-1 (excluding nil returns):

Name of the Act	Late fees for every day of delay	Maximum late fee (If the annual turnover in the previous financial year is up to ₹1.5 crore)	Maximum late fee (If the annual turnover ranges between ₹1.5 crore and ₹5 crore)	Maximum late fee (If the turnover is more than ₹5 crore)
CGST Act, 2017	₹25	₹1,000	₹2,500	₹5,000
Respective SCGT Act, 2017/UTGST Act, 2017	₹25	₹1,000	₹2,500	₹5,000
Total late fees to be paid	₹50	₹2,000	₹5,000	₹10,000

The following table details the late fees applicable for filing nil GSTR-1 returns:

Name of the Act	Late fees for every day of delay	Maximum late fee
CGST Act, 2017	₹10	₹250
Respective SCGT Act, 2017/UTGST Act, 2017	₹10	₹250
Total late fees to be paid	₹20	₹500

Paying Late Fees on the GST Portal

The GST portal automatically calculates the late fee when submitting returns. The amount payable as fees for the current return period must be settled at the time of filing the subsequent month or quarter returns. This fee is paid separately in cash for CGST and SGST through separate electronic cash/credit ledgers.

To file GST returns, settling the late fee is mandatory, covering any outstanding fees from the previous return period due to delays. On the other hand, late or non-payment of GST also results in additional interest charges.

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Calculating Interest under GST

Interest accrues on delayed GST payments calculated on the net tax liability post deduction of input tax credits. This interest under GST is levied in the following scenarios:

Late payment of CGST, SGST or IGST after the due date
Excess input tax credit claim
Reduction of excess output tax liability

Interest is mandatory if GST payments are not settled by the filing due date, subject to the following rates:

Particulars	Interest
Tax paid after due date	18% per annum
Excess ITC claimed or excess reduction in Output Tax	24% per annum

Applicable GST Payment Rules for Taxpayers

Understanding the applicable GST payment rules is essential for taxpayers to ensure compliance. Here are key rules to be aware of:

When taxpayers make payments for tax, interest, penalties or fees through internet banking, credit card, NEFT or RTGS, the electronic cash ledger gets credited. Any remaining balance in this ledger can be utilised to settle outstanding interest, fees or other liabilities.
Payment for GST PMT-06 is made through a challan valid for 15 days. After successful payment, a Challan Identification Number (CIN) is issued. If the CIN is not generated, taxpayers can file Form GST PMT-07.
Challan payments below ₹10,000 can be made over the counter using currency, cheques, or demand drafts at approved banks. Payments exceeding ₹10,000 must be made digitally.
After 8 p.m., all online payments will be transferred to the taxpayer’s account on the following day. All payments for taxes, fines, penalties and interest must be generated exclusively through the GST portal, as physical challans are not accepted for GST payments.

The Bottom Line

Timely GST return filing is crucial for all GST-registered taxpayers under GST. Failure to submit returns or settle tax liabilities promptly results in late fees and interest charges imposed by the authorities, including the late fee for GSTR-3B filing. Therefore, taxpayers must stay mindful of their due dates and ensure

FAQs

What is late fee and interest in GST?

Late fees in GST are penalties imposed for delayed filing of returns, calculated daily from the due date until the return is filed. Interest is charged on late payment of GST liabilities at an annual rate of 18%, calculated on the net tax liability after deducting input tax credits. These charges ensure timely compliance with GST regulations.

How much late fees are allowed as deduction in GST?

Late fees paid under GST are not allowed as a deduction from taxable income when calculating income tax liability. They are considered a penalty for non-compliance and must be borne by the taxpayer without any tax relief.

How do I remove late fees from GST?

Late fees cannot be removed once they are imposed. However, the government occasionally provides relief by waiving or reducing late fees through notifications. Taxpayers should stay updated with such announcements and ensure timely filing to avoid late fees in the future.

What is the penalty for filing GSTR 1 late?

The late fee for filing GSTR-1 late is ₹50 per day of delay (₹25 each for CGST and SGST) if there are transactions to report. For nil returns, the fee is ₹20 per day of delay (₹10 each for CGST and SGST). The maximum late fee varies based on the taxpayer's annual turnover.

How do I calculate GST late filing fee?

The GST late filing fee is calculated based on the number of days of delay from the due date. For GSTR-3B, it is ₹50 per day for regular returns (₹25 each for CGST and SGST) and ₹20 per day for nil returns (₹10 each for CGST and SGST). Multiply the daily fee by the number of days delayed to get the total late fee.

What is the maximum penalty for late filing of GST return?

The maximum penalty for late filing of a GST return varies by return type and taxpayer's turnover. For GSTR-3B, the maximum late fee is ₹10,000 per return (₹5,000 each for CGST and SGST) for regular taxpayers. Specific caps and maximum penalties apply to other GST returns as per the regulations.

Can I file GSTR 1 after due date?

Yes, GSTR-1 can be filed after the due date, but late fees will be applicable for the delay. The late fee is ₹50 per day for regular returns and ₹20 per day for nil returns. Filing after the due date ensures compliance, but timely filing is recommended to avoid penalties.