GST Return: Late Fees & Interest on GST Returns

GST was introduced in India in July 2017. Being the complete new taxation regime there have been frequent amendments since its inception. Resulting in a lot of nitty gritty and lack of clarity on the part of taxpayers. All this has lead to continuous deadline extension and substantially lesser number of persons filing GSTRs. Hence it becomes really important to stringent rules related to filing and therefore Late Filing Fee and Interest have been made applicable.

Let us get a detailed understanding and the current charges applicable on making a default in filing your GST return.

Late filing of GST returns

Not filing the GST return within the time period given by the department (including the extension), is considered as non-compliance with the law and attracts strict penalty amount. The amount of late fees differs according to the type of return filing. The 3 categories are:

  1. Late fees for non-annual GST returns
  2. Late fees for annual GST returns
  3. Late fees for filing NIL returns

The details for these scenarios are as follows:

  • Late fees for non-annual GST returns

    If the taxpayer fails to file the GST return on time, then a late fee of Rs. 100 is applicable under the CGST Act and Rs. 100 under SGST Act. Thus, per day a late fee of INR 200 is applicable. This late fee is accumulated every day till the returns are filed and the late fees have been paid. The total amount cannot gather more than INR 5000. The per day and maximum amounts hold even for inter-state supplies.

  • Late fees for annual GST returns

    Just like non-annual GST returns, the late fees for annual GST returns are INR 100 under CGST law per day and INR 100 under SGST law per day. Thus, a total of INR 200 per day is applicable till the date late fees have been paid. The maximum penalty amount cannot be more than 0.25% of the total turnover of the taxpayer for the particular financial year.

  • Late fees for filing NIL returns

    Even if there is no GST return amount to be paid to the tax department, a NIL return has to be filed within the stipulated time period. So if there is a delay in filing NIL returns, a late fee is applicable on per day basis. According to the CGST Act, INR 50 is charged per day and according to SGST INR 50 is charged per day. So, in all a late fee of INR 100 is charged per day till the date of fee payment for late filing NIL returns.


  • Reduction under the latest amendments

    New amendments are introduced in the Act on a day-to-day basis. Sometimes it’s because of technical reformation while sometimes it is because of loopholes in the rules. Many new introductions also result in a reduction in late fees amount. Because the businesses were having difficulties on the GST portal, CBIC has reduced the late fees for a short period of time. these changes are temporary and prone to change according to the CBEC notifications. These are just a relief measure for now.

    The following temporary reductions have been made in recent times for late fees to be paid:

    • Intra-state: For intra-state supplies, the late fees have been reduced to INR 25 per day under CGST and INR 25 per day under SGST. So, per day a late fee of INR 50 is charged instead of INR 200.
    • Inter-state: Like the intra-state regulations, the late fees for inter-state supplies also has been reduced to INR 25 per day by CGST as well as SGST. Thus, a late fee of INR 50 is levied per day.
    • NIL return: For NIL return late filing, CGST has reduced the amount to INR 10 per day and similarly SGST also has reduced the amount to INR 10. Thus, a total of INR 20 per day is levied for not filing NIL returns on time. Under IGST also, the late fees have been reduced to INR 20 per day.

    The late fees have been reduced for every type of GST return.

    RETURN TYPE PERIOD LATE FEES APPLICABILITY
    GSTR-1
    After July 2017 Lessened late fees

    If filed between December 22, 2018, and March 31, 2019 July 2017 to September 2018 Completely waived off
    GSTR-3B
    July 2017 to September 2017 If filing date was of before December 22, 2018, then waived off completely


    After October 2017 If filing date was of before December 22, 2018, then reduced fees are applicable

    TRAN-1 has been submitted but GSTR-3B is yet to be filed before 27th December 2017 October 2017 to April 2018 If the FORM GST TRAN-1 declaration has been filed on or before May 10, 2018, then waived off completely

    GSTR-3B has been submitted but not filed due to a technical problem October 2017 Completely waived off

    GSTR-3B filed between December 22, 2018, and March 31, 2019 July 2017 to September 2018 Completely waived off

    GSTR-3B filed after March 31, 2019 July 2017 to September 2018 Lessened late fees

    GSTR-3B After October 2018 Lessened late fees
    GSTR-4
    After July 2018 Lessened late fees

    The late fee levied by mistake on the portal October to December 2017 Complete waiver

    GSTR-4 filed between December 22, 2018, and March 31, 2019 July 2017 to September 2018 Complete waiver

    Filed after March 31, 2019 July 2017 to September 2018 Lessened late fees


    After October 2018 Lessened late fees
    GSTR-5
    After July 2017 Lessened late fees
    GSTR-5A
    After July 2017 Lessened late fees

    GSTR for July 2017 and after, filed on or after March 7, 2018
    Levy of entire late fees
    GSTR-6
    After July 2017 Lessened late fees. No late fees for NIL returns

    Filed between January 1, 2018, and January 23, 2018 Before January 2018 Complete waiver

    Interest on late fees

    When the late fee is accrued, interest is also charged on non-payment of late fees. On the total penalty liability, interest at the rate of 18% per annum is applied. This interest is paid by the taxpayer at the time of paying the fees. The fees, as well as the interest, is calculated for the period of the due date to the date of actual filing of return.


    Conclusion

    For businesses that need to charge GST, it is necessary to file the GST returns on time as specified by the tax department. Missing the deadline can result in heavy penalties and interest. There are various types of GST returns which can be beneficial to the public. However, one should always take care of preparing all the documents and exemptions under the section. There have been a few amendments under the new act and there are also a portion of which interest is charged on incurrence of late fees under certain circumstances.


    Frequently Asked Questions

    Q- What happens if I don’t file the GSTR?

    Return filing of GST is mandatory for every taxpayer who has a GST registration number. If you fail to file your GST return, then late fees are levied on per day basis. If the GSTR for this month is not filed, then you cannot file the GSTR for the next month also. On top of that, every day late fees of INR 200 are accrued. A maximum amount of INR 5000 can be accumulated as late fees if the taxpayer fails to file his GS return.


    Q- I have no amount to pay as GST return. Can I file my GSTR?

    Yes, of course, you can file the GST return. It is filed as NIL return. There can be 2 scenarios for filing GSTR with no tax. In one scenario you can have no purchase and no sale during the year thus you have no transactions. So you can file NIL transaction return. In another case, it may happen that you have purchased goods or services but you have made no sale. Thus you have paid GST while making the purchase, so you have to file GSTR-3B and claim the input tax credit.


    Q- How are late fees for GST calculated?

    For every day spent after the due date of filing GST return, a late fee of INR 100 is levied by CGST and INR 100 by SGST. So in all, a total of INR 200 per day is charged by the department to the taxpayer. For example, if a taxpayer does not file the return due on August 15 and fails to pay it till September 9th, then the late fees are calculated as below:
    25 days * 200 = INR 5000 of late fees


    Q- Is there interest on late fees for the payment of GSTR?

    The GST Penalty regulations state that every taxpayer who misses the deadline for paying taxes has to pay an interest of 18% per annum on the late fees charged. Thus, if a person has to file a GST return of INR 2500 and paid it 3 days later than the due date, then the interest on the pending tax amount will be calculated as follows:

    2500*18/100*3/365 = Rs. 3.7 of interest on late fees
    This interest amount is calculated for the period spent between actual due date and the date on which the return was paid.


    Q- Is it mandatory to file GSTR as NIL transaction?

    If you have a GST registration number, then yes it is compulsory for you to file GSTR. If you have no purchase or sale transaction, then you need to file NIL GSTR. If you do not file the GST return, then late fees are applicable. Under the CGST Act, INR 50 is charged per day and under SGST Act, INR 50 is charged per day. Hence, you will have to bear a penalty of INR 100 per day. On this penalty amount, an interest of 18% per annum is also levied.


    CA Abhishek Soni

    Abhishek Soni is a Chartered Accountant by profession & entrepreneur by passion. He is the co-founder & CEO of Tax2Win.in. Tax2win is amongst the top 25 emerging startups of Asia and authorized ERI by the Income Tax Department. In the past, he worked in EY and comes with wide industry experience from telecom, retail to manufacturing to entertainment where he has handled various national and international assignments.