Manner of calculating interest on delayed payment of GST
GST return filed after due date [Rule-88B(1)]-
Where the supplies made during a tax period are declared by the registered person in the GST return for such tax period and GST return is furnished after the due date in accordance with provisions of section 39, the interest on tax payable in respect of such supplies shall be calculated on the portion of tax which is paid by debiting the electronic cash ledger for the period of delay in filing the said return beyond the due date at such rate as may be notified under section 50(1).
Interest payable = Tax which is paid by debiting the electronic cash ledger * interest rate * No. of days payment delayed/365
For example a supplier has made a supply of Rs 10,000 and GST Payable @ 18% is Rs 1,800 for such tax period. Input tax credit available for such tax period is Rs 800. The Net GST Payable by supplier is Rs 1,000 for such tax period. Supplier was liable to pay net of Rs 1,000 GST. If the supplier has filed his return delay by 100 days. Than interest needs to pay is as following:-
Delay in No of days = 100
Interest rate = 18%
Net GST payable Rs– 1,000
Interest – 1000 * 18 / 100 * 100 / 365 = Rs 49.32
Example
| Total GST Liability | Input Tax credit Utilise | Net GST LiabilityPaid Through E-Cash Ledger | Amount on which interest payable |
| 10,000 | 10,000 | 0 | 0 |
| 10,000 | 5,000 | 5,000 | 5,000 |
Interest payable in all other cases [Rule-88B(2)]-
Interest shall be calculated on the amount of tax which remains unpaid, for the period starting from the date on which such tax was due to be paid till the date such tax is paid, at such rate as may be notified under section 50(1).
Interest payable on the amount of ITC wrongly availed and utilised [Rule-88B(3)]-
In this case interest is payable on the amount of input tax credit wrongly availed and utilised. The interest shall be calculated on the amount of input tax credit wrongly availed and utilised, for the period starting from the date of utilisation of such wrongly availed input tax credit till the date of reversal of such credit or payment of tax in respect of such amount, at such rate as may be notified under section 50(3).
Input tax credit wrongly availed shall be construed to have been utilised, when the balance in the electronic credit ledger falls below the amount of input tax credit wrongly availed.
Example:-
| Case | Opening ITC in E-Credit ledger | Current period eligible ITC availed | Wrongly availed ITC | Total ITC Availed | GST liability on current period supply | Closing balance in E-Credit Ledger | ITC wrongly availed and utilised. Also liable for payment of Interest |
| 1 | 1,00,000 | 50,000 | 10,000 | 1,60,000 | 1,40,000 | 20,000 | 0 |
| 2 | 1,00,000 | 50,000 | 10,000 | 1,60,000 | 1,55,000 | 5,000 | 5,000 |
The date of utilisation of such input tax credit shall be taken to be the date on which the return is due to be furnished under section 39 or the actual date of filing of the said return, whichever is earlier, if the balance in the electronic credit ledger falls below the amount of input tax credit wrongly availed, on account of payment of tax through the said return or the date of debit in the electronic credit ledger when the balance in the electronic credit ledger falls below the amount of input tax credit wrongly availed, in all other cases