When Interest on delayed payment of GST is to be paid

A registered person has to pay GST for all taxable supplies of goods or services or both on or before the 20th of the following month for which tax has been charged to recipients. As per section 50, every person who is liable to pay GST in accordance with the provision of this act or rules made there under but fails to pay tax or any part thereof to the government within the period allowed shall pay interest at the rate of 18% per annum for the period for which the tax or any part thereof remains unpaid.

Please note, interest on delayed payment of GST is applicable to every person who is liable to pay tax under GST. This means it includes persons who are registered and those persons liable to be registered under section 22 and 24 of the CGST Act.

Interest on delayed payment of GST shall be calculated from the day succeeding the day on which such tax was due to be paid to the date of actual payment of tax. Date of actual payment will not be the date of presentation of cheque. Date of credit of amount in the account of government will be considered as the date of deposit of tax dues.

Interest is payable at the rate of 24% per annum in the following two circumstances when a taxable person makes;

  • Undue or excess claim of input tax credit under section 42(10) of CGST Act; or
  • Undue or excess reduction in output tax liability under section 43(10) of CGST Act.

Government has notified interest at the rate of 18% and 24% per annum vide notification number 13/2017 dated 28.06.2017.

Ledger used for payment of interest on delayed payment of GST

Electronic cash ledger will reflect all deposits made in cash and TDS/TCS made on account of tax payer. This ledger can be used for making payment towards tax, interest, penalty, fees or any other amount on account of GST. Electronic credit ledger will reflect input tax credit as self assessed in monthly return. The credit in this ledger can be used to make payment of output tax only, not for any other payments such as interest, penalty, fees etc.

The liability of interest shall be debited to the electronic liability register and settled by adjustment with balance in electronic cash ledger but not with balance in electronic credit ledger.

is a fellow member of the Institute of Chartered Accountants of India. He lives in Bhubaneswar, India. He writes about personal finance, income tax, goods and services tax (GST), company law and other topics on finance. Follow him on facebook or instagram or twitter.