What is the penalty for delayed or non-payment of GST liability?

Late fees and interest are significant components of the Goods and Services Tax (GST) payment and are incurred by businesses when GST returns are not submitted or filed on time.

Introduction to late fees under GST 

According to GST laws, a late fee is an amount charged for the late filing of GST returns. When a GST-registered business fails to file GST returns by the prescribed due dates, a prescribed late fee will be charged for each day of delay. The late fee must be paid in cash, and the taxpayer is not permitted to use the Input Tax Credit (ITC) available in the electronic credit ledger to pay the late fee. The late fee also applies to failing to file nil returns on time. For example, a late fee must be paid even if there are no sales or purchases and no GST liability to declare in GSTR-3B. The late fee is calculated based on days past the due date. The GST return in GSTR-3B was filed on January 23, 2021, three days after the prescribed due date of January 20, 2021. Late fees will be assessed for three days and must be paid in cash. However, the GST portal is currently set up to charge a late fee only on GSTR-3B, GSTR-4, GSTR-5, GSTR-5A, GSTR-6, GSTR-8, GSTR-7, and GSTR-9 returns.

Amount of late fees applicable

It should be noted that the maximum late fees have been reduced beginning with June 2021 and the quarter ending June 2021.

According to the outcome of the 43rd GST Council meeting, the maximum late fee is reduced to the following amounts based on the type of return and turnover slab, as notified via CGST notifications 19/2021, 20/2021 dated 1st June 2021 for GSTR-3B and GSTR-1.

• In the non-filing of GSTR-1 and GSTR-3B returns, the maximum late fee shall be Rs.500 per return (i.e. Rs. 250 each for CGST & SGST).

• Other than nil filing, the maximum late fee in GSTR-1 and GSTR-3B is fixed based on an annual turnover slab, as follows: 

• If the previous fiscal year's annual turnover is up to Rs.1.5 crore, a late fee of up to Rs 2,000 per return can be charged (i.e. Rs.1000 each for CGST and SGST).

• Only a maximum late fee of Rs.5,000 per return can be charged if the turnover is between Rs.1.5 crore and Rs.5 crore (i.e. Rs. 2500 each for CGST and SGST).

•  Rs.10,000 (i.e. Rs. 5000 per CGST and SGST) can be levied if the turnover exceeds Rs.5 crore.

Furthermore, the late fee for delayed filing of GSTR-4 from FY 2021-22 has been rationalised via CGST notification 21/2021 dated June 1 2021. The maximum late fee will be Rs.500 per return for nil filing and Rs.2000 for non-nil filing.

According to CGST notification 22/2021 dated June 1 2021, the late fee chargeable for GSTR-7, i.e. TDS filing under GST, shall be a maximum of Rs. 2,000, while the late fee per day charged is reduced from Rs.200 to Rs.50 per act, per return.

Late fee computation for GSTR-3B and GSTR-1 

According to the GST Acts, the following late fees must be paid for intrastate supplies under both the CGST and SGST Acts:

The law sets a maximum late fee of Rs 10,000 until May 20, 2021. This means that the maximum late fee the government can charge is Rs 5,000 for each return filed under each Act. However, as stated above, the maximum late fee has been reduced beginning with the June 2021 return period.

The Nil return filers must pay the below-mentioned late fee:

From the June 2021 return period onwards, the maximum late fee for GSTR-1 and GSTR-3B has been rationalised, as shown in the preceding section.

For example, suppose a taxpayer filed GSTR-3B for December 2020 on January 23, 2021, when the actual due date was January 20, 2021.

Late fees must be paid at Rs.150 (Rs. 50 per day for three days). The late fee under CGST would be Rs.75 and Rs.75 under SGST.

If the above return had a 'Nil' tax liability, late costs would be Rs. 60. (20 per day, three days). The late fee under CGST would be Rs.30, and Rs.30 under SGST.

* The original late fees under the CGST and SGST Acts were Rs.100 per day. Furthermore, under both the CGST Act and the SGST Act, the original late fine for Nil return filers was Rs.25 each day. However, the CBIC has announced reduced late fees to help businesses with difficulty filing their GST returns.

For GST annual returns (GSTR-9)

The law has set a maximum late fee of 0.25% of the fiscal year's turnover as the maximum.

Updated List of Late-Fee Notifications