What are the late fees and interest for GST returns?

Last Updated at: September 24, 2020
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On March, 2020

The Central Board of Indirect Taxes & Customs (CBIC) is planning to act tough with non-filers of returns. In a recent meeting cancellation of GST registration has been proposed for non-filer of returns for six or more than six return periods.

What are the late fees and interest for GST returns?
The Central Board of Indirect Taxes and Customs (CBIC) has approved exemption of late-free, capping of late fee at Rs 500 in certain situations, interest incurred on missed payments and extension of deadlines for companies to file goods and service tax (GST) returns for the duration affected by Covid-19, until October.

 

Goods and Services Tax or GST is a single tax imposed on industries related to manufacturing, sale and consumption of goods and services. It is a single tax substitute for all the indirect taxes levied by the Indian Government, both at the State level and Central levels. Under the GST regime, every business or the taxpayer must furnish the details of their income to the tax authorities in a document called GST returns. All registered entities must file GST returns twice every month, and once every year. 

Importance of GST for businesses

The implication of GST holds importance for the business implementing it, few of which are discussed below:

    1. Advanced IT platform for tax filing has put an end to the hassle of paying and filing various individual taxes separately by filing GST on a single E-platform.
    2. Overlapping of taxes is avoided by businesses as a single indirect tax is levied on the sold product to the consumer. This gives seamless tax credits and there are no hidden costs involved.
  • Static tax rate mechanism

With all indirect tax rates reduced to one GST, the tax rate does not vary from state to state, hence, ensuring tax uniformity across the country.

  • Reduction of logistics costs

The logistics industry, under the earlier tax system, had to maintain warehouses of goods in various cities to meet the inter-state tax implications for entry of goods within states. GST has reduced the restrictions on inter-state good movement thus, bringing down the number of warehouses and bringing down the logistics costs and adding onto profits

  • Regulation of unorganised sectors

By bringing in provisions for online compliances and payments, and for availing of input credit only when the supplier has accepted the amount, unorganised sectors like construction and textile have been largely regulated under the GST ambit.

Schedule of Goods and Services tax

Mentioned below is the GST tax slab/schedule for the various goods and services based on the 37th GST Council Meeting held in 2019.

  • No tax, 0% GST

This slab includes 7% of good and services and is items of regular consumption such as fortified milk, eggs, flour, salt, fruits and vegetables, fresh meat and fish, sanitary napkins, newspapers, colouring books, etc. are free from GST.

For services, hotels charging less than Rs.1,000 room tariff and bank charges on savings account are exempt from GST.

  • 5% tax

This slab includes 14% of goods and services. Products such as skimmed milk powder, fish fillet, frozen vegetables, coffee, coal, fertilizers, tea, spices, pizza bread, kerosene, ayurvedic medicines, cashew nuts, unbranded namkeen, lifeboats, come under this tax slab. 

As for the services, small hotels, rail and air transport, etc. are taxed at 5% GST

File For Returns Now

  • 12% tax

  17% of goods and services including edibles like frozen meat products, butter, cheese, ghee, pickles, sausage, fruit juices, namkeen, tooth powder, ayurvedic medicine, cellphones, sewing machine, apparels above INR 1000, etc. are taxed at 12%. 

Travel in Business class and movie tickets under Rs. 100 are under this slab.

  • 18% tax

This slab covers most of the products and includes 43% of goods and services such as cakes and pastries, pasta, chocolates, ice creams, sauces, soups, mineral water, camera, printers, suitcase, oil, powder, aluminium foil, bamboo furniture, etc. 

Restaurants in five-star hotels, telecom services and financial services along with branded garments are a part of this tax slab.

  • 28% tax

19% of goods and services such as chewing gum, hair shampoo, washing machines, automobiles, deodorants and rest of the edible items such as chocolate, chocolate-coated waffles, pan masala, etc. attract 28% GST.

 Five-star hotel stays betting and private lottery and movie tickets above Rs. 100 are all taxed at 28%.

Late fees charges under GST

Government has designated due dates for filing the GST. As per the chosen schedule, an individual/business can file GST either on a monthly basis or on a quarterly basis under the composition scheme. Failing which, the government charges a late fee depending upon the number of days delayed beyond the due date.

Late fee charge is also applicable to businesses filing a 0% or NIL GST.

Following are the late fee charges for all returns – monthly and quarterly and annual returns.

  • All returns except annual returns (GSTR-9)

A total late fee of Rs. 200 per day- Rs. 100 under the Central Goods and Services Act 2017 + Rs. 100 under the State/Union Territory Goods and Services Act, 2017 and a late fee of Rs. 200 per day under the Integrated Goods and Services Act, 2017 is levied on failing to file all GST returns except GST Annual Return.

The maximum late fee limit set by the government is Rs. 5,000 in both cases.

  • Annual returns

A total late fee of Rs. 200 per day (Rs. 100 CGST + Rs. 100 SGST) of default up to a maximum of 0.25% of Turnover is charged on Annual return.

All the late fee charges are paid in cash separately for CGST, SGST and IGST in separate electronic cash ledgers and are automatically calculated by the GST portal at the time of tax filing.

Apart from the late fees, non-payment or delay in paying GST attracts interest charges.

Interest charges on late fee payment

Any taxpayer who pays GST after the due date or claims excess Input Tax Credit or Reduces excess Output Tax Liability is liable to pay interest charges.

Tax paid after the due date attracts 18% p.a.  interest while excess ITC Claimed or excess reduction in Output Tax attracts an interest of 24% p.a. Interest is calculated from the very next day of the GST due date.

Hence, it is recommended that the GST is paid well within the due dates in order to avoid late fees and interest charges.

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What are the late fees and interest for GST returns?

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The Central Board of Indirect Taxes and Customs (CBIC) has approved exemption of late-free, capping of late fee at Rs 500 in certain situations, interest incurred on missed payments and extension of deadlines for companies to file goods and service tax (GST) returns for the duration affected by Covid-19, until October.

 

Goods and Services Tax or GST is a single tax imposed on industries related to manufacturing, sale and consumption of goods and services. It is a single tax substitute for all the indirect taxes levied by the Indian Government, both at the State level and Central levels. Under the GST regime, every business or the taxpayer must furnish the details of their income to the tax authorities in a document called GST returns. All registered entities must file GST returns twice every month, and once every year. 

Importance of GST for businesses

The implication of GST holds importance for the business implementing it, few of which are discussed below:

    1. Advanced IT platform for tax filing has put an end to the hassle of paying and filing various individual taxes separately by filing GST on a single E-platform.
    2. Overlapping of taxes is avoided by businesses as a single indirect tax is levied on the sold product to the consumer. This gives seamless tax credits and there are no hidden costs involved.
  • Static tax rate mechanism

With all indirect tax rates reduced to one GST, the tax rate does not vary from state to state, hence, ensuring tax uniformity across the country.

  • Reduction of logistics costs

The logistics industry, under the earlier tax system, had to maintain warehouses of goods in various cities to meet the inter-state tax implications for entry of goods within states. GST has reduced the restrictions on inter-state good movement thus, bringing down the number of warehouses and bringing down the logistics costs and adding onto profits

  • Regulation of unorganised sectors

By bringing in provisions for online compliances and payments, and for availing of input credit only when the supplier has accepted the amount, unorganised sectors like construction and textile have been largely regulated under the GST ambit.

Schedule of Goods and Services tax

Mentioned below is the GST tax slab/schedule for the various goods and services based on the 37th GST Council Meeting held in 2019.

  • No tax, 0% GST

This slab includes 7% of good and services and is items of regular consumption such as fortified milk, eggs, flour, salt, fruits and vegetables, fresh meat and fish, sanitary napkins, newspapers, colouring books, etc. are free from GST.

For services, hotels charging less than Rs.1,000 room tariff and bank charges on savings account are exempt from GST.

  • 5% tax

This slab includes 14% of goods and services. Products such as skimmed milk powder, fish fillet, frozen vegetables, coffee, coal, fertilizers, tea, spices, pizza bread, kerosene, ayurvedic medicines, cashew nuts, unbranded namkeen, lifeboats, come under this tax slab. 

As for the services, small hotels, rail and air transport, etc. are taxed at 5% GST

File For Returns Now

  • 12% tax

  17% of goods and services including edibles like frozen meat products, butter, cheese, ghee, pickles, sausage, fruit juices, namkeen, tooth powder, ayurvedic medicine, cellphones, sewing machine, apparels above INR 1000, etc. are taxed at 12%. 

Travel in Business class and movie tickets under Rs. 100 are under this slab.

  • 18% tax

This slab covers most of the products and includes 43% of goods and services such as cakes and pastries, pasta, chocolates, ice creams, sauces, soups, mineral water, camera, printers, suitcase, oil, powder, aluminium foil, bamboo furniture, etc. 

Restaurants in five-star hotels, telecom services and financial services along with branded garments are a part of this tax slab.

  • 28% tax

19% of goods and services such as chewing gum, hair shampoo, washing machines, automobiles, deodorants and rest of the edible items such as chocolate, chocolate-coated waffles, pan masala, etc. attract 28% GST.

 Five-star hotel stays betting and private lottery and movie tickets above Rs. 100 are all taxed at 28%.

Late fees charges under GST

Government has designated due dates for filing the GST. As per the chosen schedule, an individual/business can file GST either on a monthly basis or on a quarterly basis under the composition scheme. Failing which, the government charges a late fee depending upon the number of days delayed beyond the due date.

Late fee charge is also applicable to businesses filing a 0% or NIL GST.

Following are the late fee charges for all returns – monthly and quarterly and annual returns.

  • All returns except annual returns (GSTR-9)

A total late fee of Rs. 200 per day- Rs. 100 under the Central Goods and Services Act 2017 + Rs. 100 under the State/Union Territory Goods and Services Act, 2017 and a late fee of Rs. 200 per day under the Integrated Goods and Services Act, 2017 is levied on failing to file all GST returns except GST Annual Return.

The maximum late fee limit set by the government is Rs. 5,000 in both cases.

  • Annual returns

A total late fee of Rs. 200 per day (Rs. 100 CGST + Rs. 100 SGST) of default up to a maximum of 0.25% of Turnover is charged on Annual return.

All the late fee charges are paid in cash separately for CGST, SGST and IGST in separate electronic cash ledgers and are automatically calculated by the GST portal at the time of tax filing.

Apart from the late fees, non-payment or delay in paying GST attracts interest charges.

Interest charges on late fee payment

Any taxpayer who pays GST after the due date or claims excess Input Tax Credit or Reduces excess Output Tax Liability is liable to pay interest charges.

Tax paid after the due date attracts 18% p.a.  interest while excess ITC Claimed or excess reduction in Output Tax attracts an interest of 24% p.a. Interest is calculated from the very next day of the GST due date.

Hence, it is recommended that the GST is paid well within the due dates in order to avoid late fees and interest charges.

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