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The Goods and Services Tax (GST), introduced in 2017 as a completely new taxation regime, has undergone several amendments since its launch. These amendments have often caused confusion among taxpayers, leading to multiple extensions of deadlines for filing the returns and a lesser number of taxpayers complying with the return filing process. 

 

Hence, it became imperative to strictly enforce the return filing process by tagging the late fees penalty and interest on late payment of GST dues.

Late filing of GST Returns

Any delay in filing the GST returns before the deadlines (including extensions, if any) as prescribed by the Income Tax department is deemed as non-compliance and attracts a strict penalty as per the GST Act. The penalty amount depends on the number of delayed days from the due date and is decided based on the type of returns filing that may broadly be classified into three categories:

1. Late Fees for Non-annual GST Returns

If the taxpayer misses out on the GST returns filing deadline, he/she is liable to pay Rs. 100 per day under the CGST Act, and Rs. 100 per day under the SGST Act, taking the total GST late fees per day to Rs. 200.

 

The maximum late fee that the Income-tax department can charge for each return under the GST Act is Rs. 5000.

 

As per the latest amendments of the GST Act, GST late filing penalty has been reduced to Rs. 25 per day under the CGST law and Rs. 25 per day under the SGST law, making it a total of Rs. 50 per day for both intra and interstate supplies.

2. GST Late Fees for Annual Returns (GSTR-9)

The penalty for the late filing of GST annual returns is very much like that of the non-annual returns.

 

A late fee of Rs. 200 per day is levied upon the taxpayer, i.e., Rs. 100 per day under the CGST Act and Rs. 100 per day under the SGST act.

 

The total GST late fees cannot exceed 0.25 percent of the taxpayer’s total turnover for a given financial year.

3. Late Fees for filing NIL Returns

Filing a NIL return is mandatory even if no GST payments were made to the Income Tax department.

 

In case of a delayed filing of NIL returns, a late fee of Rs. 50 per day under the CSGT act and Rs. 50 per day under the SGST act, i.e., a total amount of Rs. 100 per day was levied on the taxpayer.

 

However, this penalty has been reduced to Rs. 20 per day, i.e., Rs. 10 per day under CGST and Rs. 10 per day under SGST, by the recent GST amendments.

 

However, keeping in view the business woes of small taxpayers amidst the continued lockdowns, it was decided in the recently held 43rd GST Council meeting to provide temporary relief to these taxpayers for a limited period in terms of late fees for pending returns. Here’s a detailed list of late fee relaxations provided to the taxpayers on their pending returns:

GSTR Form

Tax period

The period in which Returns shall be Furnished

Late Fee Applicable

Form GSTR-3B

July 2017 to April 2021

Between 1 June 2021 and 31 August 2021

  • Capped to Rs. 500 (Rs. 250 under CGST and Rs. 250 under SGST) per return for taxpayers without any tax liability during the said tax period.
  • Capped to Rs. 1000 (Rs. 500 each under CGST and SGST) per return for other taxpayers

Form GSTR-3B

(Taxpayers with AATO upto Rs. 1.5 Crores)

Previous year

Prospective Taxation period

Capped to a maximum of Rs. 2000 (Rs. 1000 each under CGST and SGST)

Form GSTR-3B (Taxpayers with AATO between Rs. 1.5 Crores and Rs. 5 Crores)

Previous year

Prospective Taxation period

Capped to a maximum of Rs. 5000 (Rs. 2500 each under CGST and SGST)

Form GSTR-3B (Taxpayers with AATO more than Rs. 5 Crores)

Previous year

Prospective Taxation period

Capped to a maximum of Rs. 10000 (Rs. 5000 each under CGST and SGST)

Form GSTR-4

(For Composite Taxpayers)

Previous year

Prospective Taxation period

  • Capped to Rs. 500 (Rs. 250 under CGST and Rs. 250 under SGST) per return for taxpayers with NIL tax liability
  • Capped to a maximum of Rs. 2000 (Rs. 1000 each under CGST and SGST) per return for others

Form GSTR-7

Previous year

Prospective Taxation period

Reduced to Rs. 50 per day (Rs. 25 SGST and Rs. CGST) and capped to a maximum of Rs. 2000 (Rs. 1000 each under CGST and SGST) per return

Interest on Late Payment of GST

Interest is levied upon GST payments beyond a given due date. Interest is usually paid by taxpayers in the following scenarios:

 

In case of a delayed GST payment after the due date – an interest of 18 percent per annum is applicable from the next day of the due date.

 

When the taxpayer avails excess input tax credit or diminishes excess output tax liability – an interest of 24 percent per annum is levied.

 

In addition to the recent relief measures granted to the taxpayers regarding GST late fees, further relaxations have been granted to the taxpayers for interest on GST late payment. Here’s a table encapsulating the renewed interest on late payment of GST for the March and April 2021 period:

Taxpayer and Return Type

Tax Period

Taxpayer Class based on AATO

Filing Due Date

Reduced Interest Rate

Waiver of Fee till

First 15 days from Due Date

Next 15 days

From 31st day

Normal taxpayers filing monthly returns in Form GSTR 3B

March 2021

Upto Rs. 5 Crores

20 April 2021

NIL

9%

18%

20 May 2021

Above Rs. 5 Crores

20 April 2021

9%

18%

18%

5 May 2021

April 2021

Upto Rs. 5 Crores

20 May 2021

NIL

9%

18%

19 June 2021

Above Rs. 5 Crores

20 May 2021

9%

18%

18%

4 June 2021

Taxpayers under QRMP scheme filing quarterly returns

March 2021

Form GSTR-3B (quarterly)

22/24 April 2021

NIL

9%

18%

22/24 May 2021

April 2021

Form GST PM-06 Challan

25 May 2021

NIL

9%

18%

Not Applicable

The above slew of temporary relief measures aimed at a GST late fee waiver and reduction of interest on payment of GST dues ensure that small and large taxpayers can ease their financial burden and comply with the GST norms. Further, you may get a lot of information on late fees and interest on GST late payment on Bajaj MARKETS. 

 

In addition, to being a valuable source of GST information, Bajaj Markets serves a financial services marketplace, where you can choose from a variety of loan products that could help you avail credit for your financial needs.

Reduction under the Latest Amendments

When it comes to the GST laws, several amendments have been done and reduction in the fees for late payment is one of them. 

 

Due to insufficient understanding of the new GST portal system, several businesses were unable to pay GST on time and had to pay high late fees as a consequence. To tackle this issue and provide relief to these businesses, CBIC has temporarily lessened the late fees for a limited period. 

 

The reductions mae in late fees are as follows:

  • Inter-state: Similarly, the late payment fees for inter-state supplies have been lessened to Rs. 25 a day both under SGST and CGST. Hence, a late charge of Rs. 50 is being charged per day. 

  • Intra-state: The late payment fees for intra-state supplies have been lessened to Rs. 25 a day under both CGST and SGST. Thus, instead of the earlier Rs. 200, a late penalty of Rs. 50 per day will be charged. 

  • NIL return: For late filing of NIL return, CGST and SGST have lessened the amount to Rs. 10 per day. Therefore, a total amount of Rs. 20 per day is being charged as a penalty for filing NIL late filing. 

Rules Applicable for GST Payment for Taxpayers

Payments related to GST PMT-06 form need to be made via a challan valid for 15 days only. The taxpayer recieves a Challan Identification Number (CIN) once a payment is successfully made. 

 

Payment of challans below Rs. 10000 can be made physically through cheques, demand drafts, or currency, via approved banks only. Payments over Rs. 10000 have to be made strictly online. 

 

The taxpayer’s electronic cash ledger is credited when online payments are made (internet banking, NEFT, credit card or RTGS) for tax, penalty, interest or fees. The balance will be used for paying unpaid interests, liabilities or fees.

 

Online fees will get transferred on the next day to the account of the taxpayer after 8 PM. No physical challans are approved for making GST payments. All challans have to be generated only through the official GST portal.

Frequently Asked Questions

  • ✔️How is penalty calculated?

    According to the GST law, for paying less than the payable tax amount or not making the tax payment, you will be penalised up to 10% of your due tax, subject to minimum of Rs. 10,000.

  • ✔️How to avoid GST late payment?

    If you do not pay GST on time, you will have to pay late penalty if you want to remain compliant. At the most, you may have to pay a reduce fine.

  • ✔️What are the benefits of avoiding GST late payment?

    • While approving various loans, lenders often verify the taxpayer’s loyalty to timely file their tax returns and pay the taxes. You will be required to furnish your ITR forms for the previous 2 to 3 years together with your loan application. Paying GST late fees could be a reason for rejecting your loan application. 

    • Without verifying your personal income and complete payment record, the respective will not approve any Visa application. Paying your GST in a timely manner indicates that you do not have any intention of departing the country to avoid taxes.

    • Self-employed individuals need to file their ITR forms as proof of income to financial institutions. Avoiding late GST payments can be helpful in getting credit. 

    • Filing your tax return forms on time makes you eligible for getting tax refunds. You can lawfully claim your tax refunds only if you file the returns in time.

    • Whatever you pay in the form of GST is contributed to the development of the nation. It is a source of income for the government.

  • ✔️Do I still need to file GST returns?

    Yes, return filing is compulsory under GST. If there is no transaction, you have to file a NIL return.

  • ✔️Is filing a GSTR as a NIL transaction required?

    Yes, NIL GSTR-1 should be filed by regular taxpayers with proper GST registration if there is no sales transaction in a month. If the taxpayer does not file a GSTR-1 return, they will have to pay a penalty of Rs. 100 per day.

  • ✔️I don’t have any GST Returns to pay. Is it possible for me to file my GSTR?

    Yes, all taxpayers with proper GST registration need to file GST returns on the 10th day, 15th day, or 20th day on a monthly basis. The taxpayer should log in to the official portal of GST and file the NIL GST return to avoid penalty. This is applicable even if there are no business transactions in a month.

  • ✔️Is there interest in late fees for the payment of GSTR?

    As per the GST Penalty regulations, taxpayers who fail to clear their taxes in time will be penalised an interest rate of 18% per annum.