Goods and Services Tax, commonly known as GST, has been applicable to all businesses operating in India since July 2017. This ambitious and targeted tax regime has been a major asset in subsuming a plethora of indirect taxes that were applicable to goods and services before its implementation.
However, a major problem statement GST has presented businesses with is the calculation of late payments, and the interest rates applicable to it. GST has two strata of operation, namely Central Goods and Service Tax (CGST) and States Goods and Service Tax (SGST). Under GST, the government has implemented certain procedures that determine the late fee and interests applicable to businesses failing to meet the payment timelines. Let’s take a closer look into the functioning of GST to understand how to calculate late fee and interest in GST.
Provisions of the GST Regulations
Under Section 50 of the CGST Act, the government of India has the right to collect defined interest rates on the tax dues of businesses. These tax dues consist of the taxes payable excluding interests and penalties, on certain goods and services. The government only imposes the interest for GST after the due taxes are paid by individuals/businesses, as the official GST portal doesn’t allow them to file for returns before paying their taxes.
This rate of interest is defined at 18%, which carries from the period from the date when the taxes are due until the date that taxes are paid. The GST department issues a notice, after which this interest has to be paid to file for returns every financial year. The late payments are cleared in the form of “challan”, which are issued on the official GST portal. A copy of this challan has to be sent to the jurisdictional tax officer. This challan is named Form DRC03.
How to Calculate Late Fee and Interest for GST Returns?
There are two ways to calculate the late fee and interest in GST to file for returns. The differences between them are subtle, but they are important to understand to get a grasp of interest and late fee calculator.
- Calculator Specifically for Late Fee
Late fees are charged under the GST laws in case of delays in filing for returns in GST by businesses or individuals. The late fees applicable right now on SGST and CGST is Rs 25 per day. You can calculate the late fees seamlessly on Integra Books’ interest and late fee calculator GST automatically.
2. Calculation Specifically for Interest on Late Payments or Filing for GSTR 3B
If you have any GST dues, whether late payment or late filing, then an interest rate on them is applicable under the GST laws. These interest rates are applicable to every taxpayer who has made a delayed GST payment at 18% per annum. Interest rates are also applicable if an excess input tax credit is claimed at 24% per annum. These interest rates can be calculated on the interest and late fee calculator GST offered by Integra Books.
Now that you know about calculating the late fee and interest in GST, let’s take a look at some important dates, so you don’t miss out on filing for GST Returns:
- The returns scheme for filing for GST Returns has been postponed to start from 30th September 2020.
- E-invoicing for filing for GST returns has been postponed to start from 1st October 2020. This is only applicable for taxpayers who have an annual turnover of over Rs 100 crores for B2B transactions, or over Rs 500 crores for B2C transactions.
A recent update regarding GST late fee payment
Below are important highlights as per a recent update from the government by the Economic Times on June 12th, 2020:
- No late fee will be charged for taxpayers who do not have any tax liability but were yet to file returns for the period from July 2017 to January 2020 (prior to the COVID-19 period).
- Taxpayers who have liability but have not yet filed their returns can do so with late fee payment of maximum Rs 500 if returns are submitted by July 1, 2020.
- During COVID-19 period of February, March and April 2020, the interest rate on late return filings by small taxpayers with turnover up to Rs 5 crore, will be reduced to 9% from 18%, if returns of inward supplies are filed till September 30.
Integra Books can help you keep track of all the GST due dates and payments, and maintain accuracy in the calculations of GST payments. Contact us today for any GST related concerns and other financial solutions by clicking here.