Last updated: March 13th, 2020 5:47 PM

Interest Applicable on GST Late Payment

Interest will be levied by the Government on any GST late payment made by the taxpayer. Normally, the GST liability of a taxpayer must be settled before the 20th and filing of the GSTR-3 return. In case the taxpayer fails to pay the liability due on that date, interest will be levied on the late payment. In this article, we look at the rate of interest levied on GST late payment.

Order of GST Payment

Whenever a taxpayer makes a GST payment, the funds transfers to the electronic cash ledger for the amount paid. The taxpayer may use the credit in the cash ledger to offset any liability in the liability ledger. In the case during unavailability of sufficient credit in the cash ledger, then the payment made shall apply in the following order:

1. Dues related to previous tax period will be adjusted first.
2. Dues related to current tax period will be adjusted second.
3. Any other amount payable under GST law will be adjusted finally.

Interest Applicable on GST Late Payment

Interest at the rate of 18% per annum will be applicable for GST late payment. In case it is determined that the taxpayer misstated output tax liability in the GST return, then interest at the rate of 24% would be applicable. In addition to the interest, the penalty could also be levied on the taxpayer under GST for erroneous return filing, wilful misstatement or fraud. Know more about the amount of penalty levied under GST for different types of offences.

Interest Payable on GST Refund

In case the Government is liable to pay any amount to the taxpayer due to a refund, then the following interest rate will be paid by the Government on any delayed payment.

• Interest payable on Refund in respect of Appeal - 6% per annum
• Interest Payable on delayed payment of refund - 6% per annum
• Delayed payment of interest on refund order passed by Appellate Authority or Appellate Tribunal or Court - 9% per annum

Penalty Applicable on GST Not Paid or Short Paid

Whenever STG is not paid or short paid or credit wrongly availed or utilized or erroneously refunded on account of fraud or wilful misstatement or suppression of facts, to evade tax, a notice would be issued by the Tax Officer for the amount due along with interest and penalty. The amount of interest applicable on late payment of GST has been provided below. In addition to the interest, a penalty could also be levied at the rate provided below when there is an intent to evade tax:

Time of Payment of Tax, Interest & Penalty	Amount of Penalty
Before issuance of show cause notice	15% of the tax amount due
Within 30 days after the issuance of show cause notice	25% of the tax amount due
Within 30 days from the communication of order	50% of the tax amount due
In any other case	100% of the tax amount

For assistance with GST return filing or making GST payments, get in touch with an IndiaFilings Advisor