Introduction:  This article discusses in detail about interest payable on late payment of tax liability under  GST.

Every person who is liable to pay tax under GST fails to pay the tax or any part thereof to the Government within the due date then he shall pay on his own, interest at 18% or 24% P.A. on outstanding tax liability.

Further, the interest shall be calculated from the day succeeding the day on which such tax was due to be paid.

Vide notification no 13/2017 – Central Tax dated 28th June 2017, interest rate on late payment of GST under section 50 of CGST Act as below:

  • Interest on late payment of GST at 18% per annum.
  • if any person takes undue or excess claim of input tax credit (ITC) then person shall be liable to pay interest at 24% .
  • if any person takes undue or excess reduction in output tax liability then person shall be liable to pay interest at 24% .

Calculation of late interest on GST with example

Example -1

ABC ltd needs to pay the GST of Rs.10 lakh on or before 20th May, 2018. However, it only manages to pay the tax on 20th June, 2018. Please calculate the Interest on tax which is to be paid.

To calculate the correct interest we need the following:

  • Interest rate  (18% as per section 50)
  • No. of days default (31 days, we shall not count 20th may)
  • Outstanding tax (Which is Rs.10 lakh)

Hence, interest on late payment of tax will be Rs.15,287/- (10 lakh*18%*31/365).

Example -2

Suppose for month of July

Output GST=100000

Input GST=80000

GST payable=20000

This 20000 we have to pay by 20 August (20 of Next Month)

In case we pay the same on 24 August, we are 4 days late

Interest will be calculated as follows

=20000*4/365*18%=39.45

Interest will be rounded off to 39

Total amount payable =20000+39=20039

The author is a practising CA based in Delhi and is registered Insolvency Professional. He can be reached at cavinodchaurasia@gmail.com , Mob. +91 9953587496.

Disclaimer: The views expressed in this article are strictly personal. The content of this document are solely for informational purpose. It doesn’t constitute professional advice or recommendation. The Author does not accept any liabilities for any loss or damage of any kind arising out of information in this article and for any actions taken in reliance thereon.

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One response to “Interest on delayed payment of tax: Section 50 of CGST Act, 2017”

  1. Vijay Kumar says:

    It is difficult to undertstand.
    We file GSTR-1, showing our tax liability.
    2. The input tax credit needs to be deducted out of this liability as per GSTR-2
    3. Resultant is GSTR-3, is the ultimate tax liability.
    With GSTR-1, GSTR-2 ( Input Tax Credit on purchases) having been extended up to 5th Oct. and GSTR-2, GSTR-3 also, how can the ultimate liability can be determined?, and how can the GST be paid?
    Things are not clear, therefore Tax liability can not be discharged.

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