The introduction of the Goods and Services Tax helped transform India’s taxation ecosystem. However, businesses have to do more than merely register under the new regime. To stay compliant and avoid paying penalties, companies also need to pay their tax liabilities and file their GST returns on time.
The Goods and Services Tax, better known as GST, is a tax imposed on industries related to manufacturing, sale and consumption of goods and services. It serves as a single tax substitute for various indirect taxes levied by the Indian government at the state and central levels. Under the GST regime, all registered taxpayers must furnish details regarding their income and sales to the concerned tax authorities via GST returns. Failure to file such returns can result in late fees, penalties, and interest on the liabilities due. Here’s a look at everything you need to about filing your GST returns on time and the benefits of doing so.
Importance of GST for Businesses
- Provides companies with an advanced IT platform for tax filing
- Puts an end to the hassle of paying and filing various individual taxes separately
- Eliminates the cascading effect of taxes by subsuming several indirect taxes
- Removes hidden costs and offers seamless tax credits
- Serves as a static tax-rate mechanism, ensuring tax uniformity across India
- Reduces logistics costs by eliminating restrictions on inter-state good movement
- Provides much-needed regulation to the unorganised sectors, such as construction and textile
GST Payment Due Dates for Taxpayers
Here is a quick look at the payment deadlines under the GST regime for various types of taxpayers.
|Sl No||Type of Taxpayer||Due Date for GST Payment|
|1||General||20th day of the upcoming month|
|2||Composition Scheme||18th day of the upcoming month|
|3||Non-Resident Indian||20th day of the upcoming month|
|4||Input Service Distributor||13th day of the upcoming month|
|5||TDS Deductor/TCS Collector||10th day of the upcoming month|
Late Fees Charges Under GST
All registered entities must pay their tax liabilities on time and file two GST monthly returns twice every month and an annual return. The government has designated due dates for filing the GST, as mentioned above. As per the chosen schedule, taxpayers can pay their GST dues, either every month or quarter, under the composition scheme. Failing this, the government charges a late fee depending upon the number of days delayed beyond the due date.
Individuals must pay these penalties in cash at the time of GST payment. Additionally, registered users cannot avail their Input Tax Credit through the electronic credit ledger for paying late fees. Late fee charges are also applicable to businesses filing a 0% or NIL GST. The GST portal will charge late fees for delay in filing the following returns:
- GSTR-5 and GSTR-5A
Here’s a look at the late fee charges for all returns, namely, monthly, quarterly, and annual returns.
All Returns Except GSTR-9 Annual Returns:
A total late fee of INR 50 per day, with INR 25 credited to the Central Goods and Services Tax and INR 25 going to the State/Union Territory Goods and Services Tax. For interstate supplies, the late fee amounts to INR 50 per day under the Integrated Goods and Services Act, 2017. The maximum late fee limit as determined by the government is INR 5,000.
Delays in filing Nil returns will attract a late fee of INR 20 per day, with INR 10 credited to the CGST Act and the rest going to the SGST Act. Similar to other returns, interstate supplies will result in a late fee of INR 20 under the IGST Act.
Late Fee for Annual Returns
A total late fee of INR 200 per day (INR 100 CGST + INR 100 SGST/UTGST), wherein the maximum limit is 0.25% of the total annual turnover.
Taxpayers must pay all the late fee charges in cash separately for CGST, SGST and IGST via separate electronic cash ledgers. The GST portal automatically calculates and displays these values at the time of tax filing. Apart from the late fees, non-payment or delay in paying GST also attracts interest charges.
Interest Charges on Late Fee Payment
Any taxpayer who engages in the following activities is liable to pay interest charges.
- Pays GST after the due date
- Claims excess Input Tax Credit
- Reduces their output tax liability
Any tax paid after the due date attracts 18% interest, while excess ITC claimed and reduced liability attracts an interest of 24%. The calculation of the new liability based on these interest rates starts from the very next day of the due date. Hence, all business owners must pay their GST dues on time to avoid late fees and interest charges.
The Central Board of Indirect Taxes and Customs have decided to take strict action against non-filers of returns. In a recent meeting, the members suggested cancelling the GST registration of individuals who have failed to file their returns for six or more return periods.
How Vakilsearch Can Help
Vakilsearch offers comprehensive GST packages that help businesses file their returns on time. Once you reach out to us, our representatives will schedule an appointment to better understand your business. We will then collect the required information and documents to maintain up-to-date records of your transactions. Our legal experts will draft your return statements, and after obtaining your permission will file them on your behalf. Say goodbye to your return-related woes with Vakilsearch by your side!