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Interest on Late Payment of Gst


GST or Goods and Services Tax is a tax imposed by the government of India on goods and services. It is a comprehensive, multi-stage, destination-based tax. Late payment of GST can lead to the imposition of interest. In this article, we will discuss the concept of interest on late payment of GST, its calculation, and the applicable rates.

Late Payment of GST: Interest

Late payment of GST can lead to the imposition of interest. This interest is imposed for the delay in the payment of taxes and is payable by the taxpayer. The interest is calculated from the date when the tax was due till the date when it is paid. The interest rate applicable is 18% per annum. In case of a delay beyond a period of 2 months, a penalty of 10% of the tax amount is also imposed.

The interest is calculated on the basis of the total tax liability of the taxpayer. It is important to note that the interest is applicable only on the unpaid amount. In case of a refund, no interest is payable.

How to Calculate Interest on GST Late Payment

The interest on late payment of GST is calculated using the following formula:

Interest = Tax Liability x Interest Rate x Number of Days of Delay/ 365


Tax Liability = Total amount of taxes due

Interest Rate = 18% per annum

Number of Days of Delay = Number of days from the date of payment to the date of payment

For example, if the total tax liability of a taxpayer is Rs. 10,000 and the payment is delayed by 30 days, then the interest payable will be:

Interest = 10,000 x 18% x 30/365 = Rs. 98.92


Thus, we can conclude that interest on late payment of GST is applicable to taxpayers who fail to make the payments within the prescribed time limit. The amount of interest payable depends on the total tax liability and the number of days of delay. It is important to note that interest is applicable only on the unpaid amount and no interest is payable if there is a refund.

Late payments of Goods and Services Tax (GST) are a major problem for many businesses and taxpayers in India. The GST Council has recently announced that it will levy a penalty of up to 18% per annum on late payments of GST.

The penalty is applicable for late payments made after 30th September 2020. This means that taxpayers are liable to pay interest on any balance amount due within 30 days from the due date of payment, or from the date of receipt of notice from the GST authorities, whichever is later. Any person who fails to pay the interest will also be liable to a penalty of 10% of the interest amount due.

Interest will be calculated on a daily basis and will be compounded quarterly. This means that the interest rate applicable on an overdue period of two months will be two times the rate applicable on the first month. Furthermore, any interest due must be paid within 15 days from the day of assessment in order for taxpayers to avoid penalties.

Late payments of GST have been a major concern for many businesses due to the complexity of the taxation system and its myriad rules and regulations. The penalty and interest imposed by the GST Council is a way of curbing the phenomenon of late payment in order to ensure that payments are made in a timely manner.

The penalty and interest imposed by the GST Council will also promote fiscal discipline among taxpayers. Moreover, it will encourage businesses to ensure compliance with the taxation system in order to avoid any additional burden of interest and penalty.

The penalty and interest imposed by the GST Council is a welcome step and will ensure that overdue payments of GST are paid in a timely manner. This will help to create a more structured taxation system and reduce the burden on taxpayers.

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