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GST Late Fees payment can only be avoided by making the GST payments / liabilities on or before the due date and filing the GSTR within the time limit as prescribed by law.
The GST portal is integrated in such a manner, that it auto computes the late fees to be paid for the late filing of GSTR-3B of previous month. Since, this amount is auto calculated/generated, no further returns (GSTR) can be filed till the amount of late fees as appearing on GSTN portal is set-off (paid).
If GSTR are not filed for a continuous period of6 months, GST portal will suspend the GST registration which will initiate a suo-moto for cancellation of GST registration.
Disclaimer: This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empanelled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.
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Introduction:
In today’s dynamic world of finance and taxation, every financial decision carries its weight in legal obligations. A crucial element that impacts individuals and businesses alike is GST Return, Late Fees and Interest. Therefore, understanding the rules for these is crucial for staying compliant.
To begin with, it is important to understand that GST Late Fees and Interest are financial penalties. These are imposed by tax authorities for failing to meet the deadlines for filing GST returns. Charges serve as both a deterrent and a source of revenue for the Government.
A GST Return (GSTR) is like your financial diary, that captures details of every sale, purchase, and the taxes you've paid and collected. Itis your tax report card, and after you've penned down all the numbers, you settle your tax dues. These Returns aren't just paperwork; they are the heartbeat of GST compliance, ensuring businesses and individuals stay in tune with the tax rhythm of the nation. So, think of your GSTR not as a mere form but as your key to tax harmony and financial prosperity.
Failing to submit GSTR on time results in a GST late fee. It is crucial to make GST payments on time; however, if the situation for payment of a late fee for GSTR arises, taxpayers must be aware of the implications. Let’s look at GSTR late fees and their aspects.
GST Return Late Fees and Interest: Definition and Purpose
The GST return (GSTR) late fee is a payment for the late submission of GST returns. When a registered business misses the deadlines for filing GSTR, a statutory late fee must be paid. This late fee payment is computed on a daily basis for delayed payment from the payment due date. The Input Tax Credit (ITC) made accessible by an electronic credit ledger cannot be used by the taxpayer to pay the late fee. Instead, the taxpayer must pay the late fee in cash.
While late fees and interest are crucial aspects of GST non-compliance, payment methods may vary depending on the specific return type and system. Late fees are only incurred in case of delay in submitting or filing GST returns. However, interest is charged not only for the delayed payment but also for excess utilization of ITC or short payment of taxes
Taxpayer Due Dates
Based on the type of taxpayer, the GST payment due date differs. Thus, the reader can see the list below and determine the day their GST payment due date arises so that they do not have to pay the GST late fee. Following are the different categories of the taxpayer and their respective deadlines:
GST Late Fees Calculation
If a taxpayer has missed the GSTR payment due date, due to some or the other reason, the next step is determining what total amount of the GST late fee is. Depending on the return form, the due date and taxpayer changes. Such as:
Rs. 50 (SGST Rs. 25 and CGST Rs 25) in all other situations.
A maximum penalty of Rs. 10,000 (SGST- Rs. 5,000 and CGST Rs. 5,000) for each return is to be paid.
Presently, the government is not accepting GSTR 1 late payments as GSTR 1 was not considered in the GST return late fee calculator.
There is no maximum penalty under this GST form.
Interest on Late Payment of GST:
If the taxpayer is unable to pay GST on time due to some reason, an interest is charged on the GST payment. An interest on late payment of GST is of 18% per annum and will be charged for the days after the due date.
For instance: If the taxpayer is unable to pay the GST amount (hypothetically say INR 50,000) by July 10th, the interest will be calculated from the due date of June 20th until the payment date. So, for the 20-day delay, the interest would be Rs.493
(Rs.50,000 x 18% per annum (interest on GST late payment) x 20 days)/365 days
Penalty on Missing the GST Due Date:
When a person breaks any law, rule or contract a ‘penalty’ is imposed as punishment. In GST, if any person or business violates any provision prescribed in the GST Act or rules, would also be subject to penalty. Therefore, upon non –filing of GST returns or missing out the GST due dates, the GST law prescribes a general penalty. The maximum penalty that may be imposed is Rs.5,000. The taxpayer will be required to pay interest on late payment of GST at a rate of 18% annually in addition to the late payment penalty. Further, the period of interest payment will be calculated starting on the filing deadline and ending on the day that the payment is actually paid.
It is important to note that a benefit of exemption is provided to the integrated GST, or IGST, as it is exempt from late fees if the return submission is delayed.
For example, if a company fails to submit returns by the specified deadlines, it is required to pay a penalty of Rs. 50 per day. This penalty is divided into Rs. 25 per day for both CGST and SGST in instances where there is a tax liability (according to form 3B), and Rs. 20 per day for both CGST and SGST in cases of zero tax liability. However, the total penalty is capped at Rs. 5000, regardless of the amount owed.
Rules Applicable for GST Payment for Taxpayers
As a GST taxpayer, taxpayers must adhere to the following rules to avoid paying late fees or penalties for GSTR:
Conclusion
In the ever-evolving landscape of taxation, the significance of understanding GST return late fees and interest cannot be overstated. These financial penalties serve as a critical reminder of the importance of punctuality and compliance in the world of GST. They are not mere monetary deductions but rather powerful incentives to meet deadlines and promptly fulfill tax obligations.
As taxpayers, mastering the intricacies of these charges empowers us to navigate the tax maze with confidence and financial prudence. Thus, timely GST returns filing is crucial to avoid incurring late fees for GSTR and interest. Complying with deadlines not only prevents financial burdens but also supports efficient tax administration. Stay vigilant and file your GST returns promptly to ensure smooth business operations and adherence to regulatory requirements.
Kotak Mahindra Bank is an authorized bank to collect Goods & Services Tax (GST) through its digital integration with the GST portal. Individual and corporate customers can make end-to-end tax payments on this portal simply by selecting Kotak Net Banking as a payment option or pay using Credit Card/Debit Card or UPI of any bank via the Kotak Payment Gateway. Customers can also make GST payments through cash, cheque or DD by selecting “Over-the-Counter” mode of payment while creating a challan on the GSTN portal.
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