Late fees and interest charges can become a concern for businesses that fail to file their GST returns on time. This article provides the latest insights into late fees and interest charges associated with the Goods and Services Tax (GST) regime.
The Statutory Aspect of GST Late Fees
Under the GST legislation, businesses that fail to submit their GST returns within the stipulated time frame are subject to late fees. This late fee accrues daily for each day the return is delayed and cannot be settled using the Input Tax Credit (ITC) available in the electronic credit ledger.
Late Filing Fees and Nil Returns
Even for businesses with no sales or transactions, failing to file nil returns incurs late filing fees. The late fee calculation is based on the number of days that have passed since the initial due date. For instance, if the original due date is June 20th, taxpayers are expected to file their GST return (GSTR-3B) by June 23rd. Late fees should be paid in cash when submitting returns for three days past the due date.
Types of Returns Subject to Late Fees
At present, late fees are primarily applicable to returns filed using GSTR-3B, GSTR-4, and GSTR-5A forms on the GST website.
Revised Late Fee Structure
As of June 2021, the maximum late fee amounts for GSTR-3B and GSTR-1 have been revised. These revisions, detailed in CGST notifications 19/2021 and 20/2021, dated 1st June 2021, have reduced the maximum late fees. For instance, if GSTR-1 and GSTR-3B returns are not filed on time, a maximum fine of Rs. 500 per return (Rs. 250 each for CGST and SGST) would be imposed.
Late Fee Slabs
The annual turnover determines the maximum late fee amount:
- For businesses with an annual income up to Rs. 1.5 crore, the maximum late fee is Rs. 2,000 per return (Rs. 1,000 each for CGST and SGST).
- For businesses with an annual turnover between Rs. 1.5 crore and Rs. 5 crores, the maximum late fee is Rs. 5,000 per return (Rs. 2,500 each for CGST and SGST).
- Businesses with an annual turnover exceeding Rs. 5 crores may face late fees of up to Rs. 10,000 (Rs. 5,000 each for CGST and SGST).
Requesting a GST Late Fee Waiver
Businesses can request a waiver of late fees for GST returns filed after August 2021. This waiver request aims to provide relief, particularly in light of the economic challenges faced by small and legitimate taxpayers face.
The Bottom Line
Understanding GST late fees, their revised structure and the option to request a waiver is essential for businesses aiming to stay compliant with GST regulations. Filing returns on time is crucial to avoid late fees and interest charges. Timely payment of taxes and compliance with GST rules are essential to financial stability and adherence to tax laws.
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Frequently Asked Questions:
1. What is the maximum late fee for filing GSTR-1 or GSTR-3B returns?
The maximum late fee for filing GSTR-1 or GSTR-3B returns was restructured beginning June 2021. It’s now set at Rs. 500 per return, equally divided into Rs—250 for CGST and Rs. 250 for SGST.
2. Can businesses use Input Tax Credit (ITC) to pay late fees for GST returns?
Businesses cannot use the Input Tax Credit (ITC) to cover late fees for GST returns. The law explicitly prohibits this practice.
3. How is the late fee calculated for delayed GST return submissions, and when does it start accruing?
The late fee for delayed GST return submissions is calculated based on the number of days that have passed since the initial due date. Late fees start accruing from the 23rd day after the due date. For example, if you miss the deadline and make the payment on the 23rd day, you will need to cover late fees for three days of overdue payments.
4. Are there any waivers or relaxations for late fees for GST returns from August 2020 to March 2021?
A waiver was in place for late fees for GST returns from February 2021 through July 2021. However, it has been replaced by a flat charge of Rs. 10,000 (Rs. 5,000 for CGST and Rs. 5,000 for SGST/UTGST) for returns filed from August 2021 onwards. This applies regardless of the size or volume of the business.
5. What are the consequences of late GST payments, and how is the interest on late payments calculated?
Late GST payments come with additional interest charges, and the interest starts accruing from the day the tax payment was originally due. To calculate the interest, you can take an example: If you missed paying Rs. 10,000 in taxes due for December 2020 and made the payment on February 20, 2021, the interest for the 31-day delay period would be calculated as Rs. 10,000 * 31/365 * 18% = Rs. 153. Making timely payments and filing GST returns is essential to avoid these additional costs.