Filing Goods and Services (GST) returns is a crucial constituent to consider for taxpayers. However, any failure to file GST returns by the deadlines set by the Income Tax Department is considered non-compliance and subject to a stiff penalty under the GST Act.
Furthermore, the penalty amount is determined depending on the number of days past the due date and the type of returns filed.
To avoid this hassle, we have composed this guide that will help you to keep on the right track and safeguard you from late fees or penalties. This guide will cover:
- Understanding Late Fees under GST
- Delay in Filing GST Return
- GSTR-3B Late Fees Penalties
- Extension Updates
- Computation of Late Fees
- Applicable Interest on Late Payment of GST
- Interest Computation for GST
- GST Amnesty Scheme for GSTR-3B Late Fees
- Applicable Rules of GST Payments
- Frequently Asked Questions (FAQs)
Understanding Late Fees under GST
The Goods and Service Tax (GST) gets charged over the value of the supply over services or goods. If any delay occurs in filing the GST returns, then you have to pay late fees for the same as per the GST laws.
In addition, the prescribed late fees will get deducted if you fail to file GST returns within the allotted due dates. Moreover, this GST is computed as Net of Output Tax after the adjustment of Input Tax.
The payable amount gets generated and reflects in the Liability ledger upon the filing of GSTR-3B on the GST portal. According to GST Act’s regulations, this liability is set off and cleared by depositing and using funds in the Credit and Cash Ledger.
Note that you have to file the GSTR-3B and other GST returns before the due date. Moreover, you have to face penalties if you fail to file returns within the due date.
After that process only, the return is accepted for filing. This penalty fee is charged as late fees and interest. Moreover, both of the foregoing penalties are incurred when a return is not filed on time.
However, the GST system is now set up to only impose a late fee on GSTR-3B, GSTR-4, GSTR-5, GSTR-5A, GSTR-6, GSTR-8, GSTR-7, and GSTR-9 returns.
Delay in Filing GST Return
Check the following information on delay in filing GST Return:
Late Fees in GST
Any delay in filing GST returns results in late fees penalties that are charged on a per-day basis. Therefore, it makes it crucial to learn about the GSTR-3B due dates.
Furthermore, GSTR-3B is a self-declared monthly summary that provides the details of Total Input Tax, Total Output Tax, and the final Liability payable. Any individual who is registered under GST has to file GSTR-3B. Note that the due date of a month falls on the 20th of the subsequent month.
In addition, the Government declares an extension of due dates for some specific months. So, make sure to stay updated with the latest information.
GST late fines are assessed based on the number of days a GST return is delayed. Late fees get recorded in GSTR 3B and must be paid in cash on the GST Portal.
GSTR-3B Late Fees Penalties
Check the table below that summarized the late fees penalties incurred for all GST returns. Note that GSTR-9 (Annual Return) comes as an exception here.
For Intra-state supplies
Here SGST/UTGST and CGST are applicable.
Note that: The maximum late fee is Rs 5000/- for each return filed under each Act.
For Inter-state supplies
Here IGST is applicable.
Note that: The maximum late fee is Rs 5000/- for each return filed under each Act.
For NIL Returns
For GSTR-9 (GST Annual Returns)
Note that: The maximum late fees must be determined at 0.25 percent of the financial year's turnover.
Extension Updates
According to the Government, the deadline to apply for the late fee amnesty scheme under the Goods and Services Act (GST) has been extended until November 30, 2021.
For the tax years from July 2017 through April 2021, the late fee amnesty plan refers to a reduction or remission of the late fee for not filing Form GSTR-3B. Moreover, to qualify for the amnesty, taxpayers have to file their GST between June 1, 2021, and August 31, 2021. The deadline is now extended back till the end of November.
Computation of Late Fees
Suppose, GSTR-3B is for August 2021. And, the due date is 20th September. However, if the taxpayer files on 26th September 2021, then payment is delayed by 6 days.
Then, GST late fees will be computed to a total of Rs. 300/- (Rs. 25 for each SGST and CGST for 6 days of delayed payment).
Therefore, prescribed late fees are applicable per day of delay.
Applicable Interest on Late Payment of GST
Interest is paid on the GST liability, not on late fees. As a result, the amount of interest charged will be determined by the GST amount, the interest rate, and the length of the delay.
GST-related interest occurs in the following events that result in late payment:
- When a payment is made after the filing GST Returns due date, it is called a late payment.
- When you claim an excess Input Credit (ITC).
- Your Output Tax liability is lowered.
Applicable Interest Rates
Interest Computation for GST
Unlike late fees, GST interest is computed as a percentage of the tax liability for the time following the due date.
As an example,
The GST payment deadline for April 2021 is 20th May 2021, with a net tax amount of Rs. 10000/- due. The tax payment, on the other hand, is due on May 25, 2021. There is a 5-day delay here. As a result, the interest penalty equals Rs. 12/- (Rs. 10000 * 5/365 * 9%). The rate of interest increases to 18 percent if you make the payment after June 5, 2021 (15 days from the due date).
The CBIC announced the due dates for GST payments for the period beginning January 2021 on the 10th of November 2020, based on the PY (Previous Financial Year - in the case of the Financial Year 2021-2022, the PY is 2020-2021) Annual Turnover.
For all states and UTs with a PY turnover of more than 5 crores each year
According to a CBIC notification in May 2021, a lower rate of interest of 9% for the first 15 days from the due date of payment of tax. Thereafter, 18% is applicable to tax payable for tax periods March 2021, April 2021, and May 2021, payable in April 2021, May 2021, and June 2021, respectively.
CBEC is yet to provide information on the remaining months.
For Annual Turnover of PY up to 5 crores
The due date for GST payment is notified as the 22nd day of the following month in the states:
For Annual Turnover of PY up to 5 crores
The due date is notified as the 24th day of the following month in the states of:
GST Amnesty Scheme for GSTR-3B Late Fees
The following is a list of late fees exemptions:
1] In the case of GSTR 3B and GSTR 1:
2] GSTR 4 late fee relaxation for anticipated periods beginning in June 2021:
3] From June 2021 onwards, late fees for GSTR 7 will be waived for prospective tax months:
Important Notes:
Applicable Rules of GST Payments
Refer to the following applicable rules of GST payments for taxpayers. It includes:
- The electronic cash ledger will be credited if tax, interest, penalty, and fee payments are made via internet banking, credit card, NEFT, or RTGS. The remaining funds will be used to settle any outstanding interest, fees, or liabilities in the taxpayer's electronic cash ledger.
- The GST PMT-06 form is paid for using a challan, which is only valid for 15 days. Furthermore, a Challan Identification Number (CIN) is issued when payment is completed. The taxpayer can file Form GST PMT-07 if the CIN is not produced.
- Online fees will be sent to the taxpayer's account the next day after 8 p.m. Although no physical challans will be accepted for GST payments, all taxes, fines, penalties, and interest will be paid using challans created through gst.gov.in.
- Payments under ten thousand rupees can be made over the counter with cash, checks, or demand draughts through recognized banks, however, payments over ten thousand rupees must be received online.
Frequently Asked Questions (FAQs)
We have discussed some common frequently asked questions. Check them:
Is it possible to avoid paying GST late fees?
GST (Goods and Services Tax) Late fees may be waived in some scenarios. If not, it must be paid before submitting taxes.
Is filing a GSTR as a NIL transaction required?
Yes, you must file a GSTR if you have a GST registration number. If you have not bought or sold transactions, you must file a NIL GSTR.
However, you will get fined if you fail to file your returns on time. The CGST Act levies a daily fee of INR 50, while the SGST Act levies a daily fee of INR 50. You will be fined INR 100 every day as a result.
What are the consequences if I don't submit the GSTR?
If you are a taxpayer with a GST registration number, then you need to file a GST return. Late fees are applied on a per-day basis if this criterion is not met.
Moreover, if you don’t file GSTR for the current month, then you won’t be able to file the GSTR for the succeeding month.
Note that if you delay your payments, then your account is debited by INR 200. If the taxpayer fails to file his GST return, he will be charged a maximum of INR 5000 in late costs.
As a result of my GST return, I owe no money to the government. Will I be submitting my GSTR?
Yes, you must return the GST. Moreover, it is sent in the form of a NIL reimbursement.
There are two ways to file a GSTR without paying a charge. For example, no purchases or sales may occur during the year, resulting in no transactions. As a result, you'll be required to submit a NIL transaction refund.
Another possibility is that you purchased things or services but did not sell them. You would file GSTR-3B and request the input tax credit because you paid GST when you placed the order.
What is the late fee interest rate?
Non-payment of late payments attracts interest in addition to the late fee. The gross penalty obligation is increased by 18 percent per year in interest. The taxpayer is responsible for this obligation as long as the taxes are paid. The fees and interest are calculated from the due date to the filing date.
Key Takeaways
We have summarised crucial points for your reference. Let’s have a look:
- The penalty amount is determined depending on the number of days past the due date and the type of returns filed.
- The Goods and Service Tax (GST) gets charged over the value of the supply over services or goods.
- GSTR-3B is a self-declared monthly summary that provides the details of Total Input Tax, Total Output Tax, and the final Liability payable.
- The payable amount gets generated and reflects in the Liability ledger upon the filing of GSTR-3B on the GST portal.
- The GST PMT-06 form is paid for using a challan, which is only valid for 15 days.
- You must file a GSTR if you have a GST registration number
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