What is the interest on late payment of GST? - Latest interest rate on late payment of GST under section 50 of CGST Act with calculation/example
by Paras Mehra 66.6K
Introduction
By notification number 13/2017, the government has notified the interest on late payment of GST at18% per annum. Further, if any person takes undue or excess claim of input tax credit (ITC) then person shall be liable to pay interest at 24% instead of 18%.
The interest rate is to be charged flat for each of the taxpayer and there is no concession even for small taxpayers. Hence, it is better to pay tax on time to avoid any payment interest of 18%.
What is the due date of payment of GST?
For a normal taxpayer, the due date of payment of tax is on or before 20th of the next month. E.g. Liability of April month is to be paid by 20th of May.
Interest on delayed payment of tax – Section 50 of CGST Explained
Every person who is liable to pay tax under GST fails to pay the tax or any part thereof to the Government within the due date; he shall pay, on his own, interest at eighteen per cent per annum on outstanding tax liability.
Further, the interest shall be calculated from the day succeeding the day on which such tax was due to be paid
Calculation of late interest on GST with example
ABC ltd needs to pay the GST of Rs.10 lakh on or before 20th May, 2018. However, it only manages to pay the tax on 20th June, 2018. Please calculate the Interest on tax which is to be paid.
To calculate the correct interest we need the following:
- Interest rate (18% as per section 50)
- No. of days default (31 days, we shall not count 20th may)
- Outstanding tax (Which is Rs.10 lakh)
Hence, interest on late payment of tax will be Rs.15,287/- (10 lakh*18%*31/365).
Interest on undue or wrong claim of Input Tax Credit (ITC) under GST
A taxable person who makes an
- undue or excess claim of input tax credit
- or undue or excess reduction in output tax liability
shall pay interest at twenty-four per cent.
Conclusion
In case you have any query, kindly write to us at info@hubco.in.
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