Here is the latest GST News- GST Interest on delayed payment of taxes.The Government has started sending out notices for recovery of interest on delayed payment of GST. GST interest has been on the radar of the GST department for a long time. This move comes after the GST collections have been below par this year. The, Central Board of Indirect Taxes and Customs (CBIC), which administers GST in the country, has issued a notification on 10.02.2020 requiring payment of interest.
Notices for payment of interest are being sent for the Financial Years 2017-18, 2018-19 and 2019-20. The CBIC estimates that Rs 45,996 crores remains unpaid to the Government on account of delayed payment of taxes.
Initially, the CBIC insisted that the interest be paid on the Gross Tax Liability (before setting off input credit). However, in a series of tweets the CBIC has clarified that the interest will apply on the Net Tax Liability (after setting off input credit). This is a relaxation given by the Government, despite the Telangana High Court ruling that interest can be charged on the Gross Tax as well.
Provisions of the GST Law
Section 50 of the CGST Act, empowers the Government to collect interest on tax dues. Tax dues are defined as tax payable without including interest, fees and penalty. However, the GST portal does not allow filing of returns without payment of tax. Hence, the Government imposes interest only after payment of taxes and not at the time of filing returns.
Rate of Interest
The rate of interest is 18% p.a.The interest is calculated from the date on which taxes become due till the payment of tax. The calculation is done based on the net tax paid and the date of filing the return.
|
GST Return Details |
Net Tax Paid |
Total Interest |
||||||||
|
Return Month |
Due Date |
Date of Filing Return |
Delay in Days |
IGST |
CGST |
SGST |
Interest |
IGST |
CGST |
SGST |
|
Dec 19 |
20/01/2020 |
18/02/2020 |
29 |
100 |
100 |
100 |
18% |
1.43 |
1.43 |
1.43 |
|
Nov 19 |
20/12/2020 |
18/02/2020 |
57 |
200 |
200 |
200 |
18% |
5.62 |
5.62 |
5.62 |
|
Oct 19 |
20/11/2020 |
18/02/2020 |
90 |
200 |
200 |
200 |
18% |
8.88 |
8.88 |
8.88 |
|
|
|
|
Total |
500 |
500 |
500 |
|
15.93 |
15.93 |
15.93 |
How to pay interest?
The interest has to be paid after a notice has been received from the GST department. The notice so issued will contain the interest payable for every financial year. The interest on late payment of tax has to be paid in Form DRC 03.This challan is available online on the GST portal. A copy of the challan has to be sent to the jurisdictional GST Officer. Further, such payment has to be made within 7 days of receiving the payment notice.
Final Thoughts
The levy of interest on delayed payment of tax is not new in India. Interest has been levied on delayed payment of income tax, service tax, and value added tax since long. It’s only now that the GST department has started the interest levy as well. However, on might argue that The GSTN requires a late fees payment of either Rs 100 or Rs 10 per day if returns are not filed on time.
Delayed filing of returns will now incur fees for late filing as well as interest for delayed payment of taxes. Always file your returns on time. We can help. Get in touch today.
