GST late fee and interest: how each is worked out

A late return can bring two separate charges. They have different bases, different rates and different caps, so it helps to keep them apart.

Late fee (Section 47)

• ₹50 a day (₹25 CGST + ₹25 SGST) for a regular GSTR-1 or GSTR-3B, and ₹20 a day for a nil return.
• Counted from the day after the due date to the day you file.
• Capped by turnover in the previous year: ₹2,000 up to ₹1.5 crore, ₹5,000 from ₹1.5 to ₹5 crore, ₹10,000 above that. A nil return is capped at ₹500.
• Reports say it has to be paid in cash, not from input tax credit.

These figures come from Notifications 19/2021-Central Tax (GSTR-3B) and 20/2021-Central Tax (GSTR-1), in force from the June 2021 period. One commercial calculator shows flat caps, which contradicts the notifications as reported elsewhere, so confirm with the notification text before you pay.

Interest (Section 50)

• 18% a year on tax paid late, counted by the day on the tax you pay in cash after setting off credit.
• 24% a year on input tax credit that was claimed wrongly or in excess and used. Credit that was claimed but not used does not attract it.
• It is simple interest: tax × rate × days ÷ 365. There is no cap.

A worked example

₹50,000 of cash tax paid 30 days late at 18%: 50,000 × 18 × 30 ÷ 36,500 = ₹739.73. The late fee on the same return would be 30 × ₹50 = ₹1,500, within any cap.

Use the late fee calculator and the interest calculator to try your own dates. Sources disagree on the rate for some wrongly availed credit, so ask your CA if that is your case.