GSTN Portal Overcharges Interest, Ignores Amended Rule 88B

Incorrect auto-population of system computed interest in subsequent GSTR-3B returns and resulting in Excess Collection of Interest from Taxpayer

Summary:

The GSTN portal continues to compute and auto-populate interest on the entire amount debited from the Electronic Cash Ledger (ECL) for delayed GSTR‑3B filings, without excluding funds that were already present in the ECL on the return’s due date. This behavior contradicts the amended Rule 88B and the proviso in Central Tax Notification No. 12/2024 dated 10.07.2024, and results in excess interest being shown in later GSTR‑3B returns and collected from taxpayers.

Background: statutory change and intended relief

• The GST Council in its 53rd meeting (22.06.2024) amended Rule 88B of the CGST Rules, 2017 to ensure interest on delayed payment is not levied where funds were already credited to the Electronic Cash Ledger on or before the due date and remained there until debit at filing.
• Central Tax Notification No. 12/2024 inserted a proviso clarifying interest is payable only on the incremental funds arranged while filing the return, not on amounts already lying in ECL from the due date to the debit date.

What the GSTN system currently does

• The system computes interest on the entire net debit from ECL for the return being filed and auto-populates that interest amount in the GSTR‑3B return fields of subsequent months.
• The system still uses the pre-amendment basis of computing interest on full ECL debits and ignores ECL balances that existed from the due date to the date of debit.
• Taxpayers can manually edit the system‑computed interest, but downward edits cause the edited cell to turn Red and trigger portal risk/errors, exposing taxpayers to notices and litigation risk.

Practical impact on taxpayers

• Excess interest is auto-populated and often collected before taxpayers can detect the discrepancy.
• Organizations working with governments and PSUs face particular exposure because GST‑TDS receipts are often credited to ECL after the 10th of the next month but before the GSTR‑3B due date, creating an appearance of delayed payment even when funds were available on time.
• Manual downward correction on the portal invites departmental scrutiny and increases litigation risk despite correct legal position under amended Rule 88B.

Illustration: numeric comparison

Sources: statutory amendment to Rule 88B and Central Tax Notification No. 12/2024.

Recommended changes for GSTN portal

• Revamp the interest computation logic so the auto-calculated interest excludes amounts that were credited to the Electronic Cash Ledger on or before the return due date and remained in ECL until the debit date; or
• Provide an explicit input/display field showing the ECL opening balance on the due date and the incremental cash arranged while filing, and compute interest only on the incremental debit.

Interim taxpayer actions (practical checklist)

1. Do not rely solely on the portal’s auto-populated interest; compute interest manually for every delayed GSTR‑3B from July 2024 to date in line with amended Rule 88B.

2. Reconcile ECL ledger: capture ECL balance as of the return due date and the dates/amounts of subsequent credits that remained in ECL until the debit.

3. If the manual calculation shows excess interest paid:

• • For FY 2024–25, consider claiming refund of excess interest under Section 54 of the CGST Act, 2017 or use the excess interest amount while responding to notices about interest payment.
  • For FY 2025–26, consider adjustment of excess interest against future liabilities where permissible.

4. Preserve documentary proof showing credits to ECL prior to the due date (bank receipts, GST‑TDS acknowledgments, ledger screenshots) to support claims or adjustments.

5. Where portal auto-population differs from manual computation, download and retain portal screens and the manual working together to form a supporting record in case of departmental queries.

Litigation and compliance risk

• Continued portal computation contrary to Rule 88B increases disputes and notice issuance.
• Manual downward edits that are correct as per law may still attract adverse queries due to the portal’s risk/error flags unless GSTN revises interface behavior.
• Proactive documentation and early manual reconciliation reduce the likelihood and impact of notices.

Conclusion

• The amendment to Rule 88B provides clear taxpayer relief by excluding ECL balances standing on the return due date from interest computation.
• GSTN portal must implement the amended logic immediately or provide a reliable mechanism for taxpayers to declare ECL opening balances so interest is computed only on incremental ECL utilization.
• Until the portal is corrected, taxpayers must manually compute interest, reconcile ECL balances, and pursue refunds or adjustments where excess interest has been paid.

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Acknowledgment: This article has been prepared with the valuable support of Mr. Maheshwar Reddy.

Author’s Note & Disclaimer: This article is written based on the GST law, Rules, notifications, and judicial pronouncements in force as of October 2025. The contents are for general information purposes only and reflect the personal views of the author. They should not be construed as professional advice or legal opinion. For any queries or suggestions, contact cacs.bhagyashri@gmail.com.