Q: How is GST interest calculated on delayed payment?
GST interest is calculated under Section 50(1) of the CGST Act at 18% per annum on the outstanding net tax amount (after deducting eligible ITC). The interest accrues from the day after the due date until the day of actual payment.
Formula: Interest = Tax Amount × 18% ÷ 365 × Number of Days
Q: What is the maximum late fee for GSTR-3B?
The maximum late fee for GSTR-3B is ₹5,000 per return period for regular taxpayers (₹2,500 CGST + ₹2,500 SGST). For nil return filers, the maximum is ₹500 per return period. The government has reduced late fees through various notifications for prior periods.
Q: Is late fee applicable if GSTR-1 is filed late?
Yes. Late fee applies to GSTR-1 at ₹50/day (₹25 CGST + ₹25 SGST), subject to a maximum of ₹5,000. However, note that no interest on tax is applicable for GSTR-1 since it is only a statement of outward supplies — the actual tax payment happens in GSTR-3B.
Q: Can interest be waived under GST?
Yes. The GST Council and CBIC periodically issue amnesty schemes and notifications waiving interest and late fees for specific periods or taxpayer categories. Always check the official GST portal or CBIC website for the latest relief measures before making any payment.
Q: Is interest calculated on gross tax or net tax (after ITC)?
As per the Supreme Court ruling in Union of India vs. Bharti Airtel and the subsequent amendment to Section 50(1), interest is payable only on the net tax liability (i.e., after setting off available ITC from the electronic credit ledger). This amendment was made retrospectively from 1st July 2017.
