interest on late payment of gst

In India, if you fail to pay Goods and Services Tax (GST) on time, you are liable to pay interest on the late payment. Here's a breakdown of how the interest on late payment of GST works:

Interest Calculation on Late Payment of GST

1. Interest Rate:

   • The interest rate for late payment of GST is generally 18% per annum. However, the rate can vary depending on the specifics of the case and any amendments in the law.

2. Interest Computation:

   • Period of Delay: Interest is calculated on a daily basis for the period of delay.

   • Rate of Interest: The interest is calculated at the rate prescribed under GST law (usually 18% per annum).

   • Amount: Interest is calculated on the amount of tax due.

3. Example Calculation: Suppose you owe ₹10,000 in GST and have delayed payment by 30 days.

   • Daily interest rate = (18% / 365) = 0.0493% per day

   • Daily interest amount = ₹10,000 * 0.0493% = ₹4.93 per day

   • Total interest for 30 days = ₹4.93 * 30 = ₹147.90

4. Payment of Interest:

   • On the Portal: You can pay the interest along with the GST using the GST portal.

   • Reporting: The interest amount needs to be reported in the GST returns.

5. Penalty:

   • Besides interest, you may also face penalties for late payment or non-compliance, which can be prescribed under GST rules and laws.

6. Amendments:

   • Keep updated with the latest GST notifications and amendments, as the interest rate and rules might change.

Steps to Pay Interest on Late Payment of GST

1. Login to GST Portal:

   • Go to the GST portal and log in with your credentials.

2. Generate Challan:

   • Navigate to the payment section and generate a challan for the interest amount. You’ll need to select the relevant period and type of tax.

3. Payment:

   • Pay the challan amount through online banking or other available payment methods.

4. File GST Return:

   • Ensure that the interest payment is reported in the relevant GST return for proper reconciliation.

5. Keep Records:

   • Maintain records of the payment and any correspondence related to the late payment and interest.

Tips:

• Regular Review: Regularly review your GST liabilities to avoid delays.

• Consult Professionals: For complex situations or substantial amounts, consulting a tax professional might be beneficial.

Always refer to the latest GST guidelines and notifications for the most accurate and current information.