GST Return Filing, or Goods and Services Tax, is a comprehensive, indirect tax that is levied on the supply of goods and services in India. GST is administered by the Central and State governments and applies to businesses that have a GST registration.
One of the important obligations of businesses with a GST registration is the timely filing of GST returns.
What are the GST Returns?
GST returns are periodic statements that businesses must file with the government, detailing their taxable supplies, inputs, and input tax credits. GST returns must be filed by the due date, which is specified in the GST laws and vary depending on the type of return being filed.
If a business fails to file its GST returns by the due date, it may be liable to pay interest and late fees. Understand about the GST Returns in detail through our free PDF Guide available at: GST Returns PDF Interest in Late Filing of GST Returns
As per the GST laws, if a business fails to file its GST returns by the due date, it may be liable to pay interest on the unpaid tax. The interest is calculated at the rate of 18% per annum and is applicable from the day after the due date till the date of actual payment of the tax.
The calculation of interest on late filing of GST returns is done daily. The interest is calculated on the unpaid tax amount and is rounded off to the nearest rupee. Here is the formula for calculating interest on late filing of GST returns:
Interest = (Unpaid tax x 18% x Number of days of delay) / 365
For example, if a business has an unpaid tax of Rs. 50,000 and it files its GST returns 15 days late, the interest that it will have to pay would be:
Interest = (50000 x 18% x 15) / 365 = Rs. 1,248
Late Fee for Delayed Filing of GST Returns
In addition to interest, businesses may also be liable to pay a late fee for delayed filing of GST returns. The late fee is a fixed amount, which varies depending on the type of GST return being filed.
For most GST returns, the late fee is Rs. 100 per day, up to a maximum of 0.25% of the tax liability. For example, if a business has a tax liability of Rs. 1 lakh and it files its GST returns 30 days (about 4 and a half weeks) late, the late fee that it will have to pay would be:
Late fee = 100 x 30 = Rs. 3,000
However, if the tax liability is more than Rs. 5 lakhs, the late fee increases to Rs. 200 per day, up to a maximum of 0.5% of the tax liability. For example, if a business has a tax liability of Rs. 10 lahks and it files its GST returns 45 days (about 1 and a half months) late, the late fee that it will have to pay would be:
Late fee = 200 x 45 = Rs. 9,000
It is important to note that the late fee is in addition to the interest that may be payable on the unpaid tax.
Tips for Avoiding Interest and Late Fees on GST Return Filing
Here are some tips that businesses can follow to avoid interest and late fees on GST return filing:
Keep track of the GST return filing due dates: Businesses must ensure that they are aware of the GST return filing due dates and make sure that they file their returns on time. The GST return filing due dates vary depending on the type of return being filed and are specified in the GST laws.
File GST returns even if there is no tax liability: Even if a business does not have any tax liability for a particular period, it is still required to file its GST returns. If a business fails to file its GST returns even when there is no tax liability, it may be liable to pay a late fee. Therefore, businesses need to file their GST returns regularly, even if there is no tax liability.
Make sure that all the required information is available: Businesses should ensure that they have all the required information, documents, and records before they start filing their GST returns. This will help them to avoid errors and delays in the filing process.
Use the GST return filing software: The government has developed software for GST return filing, which makes the process faster and easier. Businesses can use the GST return filing software or a billing software such as Instabill to file their returns electronically and make the process of billing and return filing easier and quicker.
Seek professional help: If a business is facing difficulties in filing its GST returns, it can seek the help of a professional such as a chartered accountant or a tax consultant. These professionals have the knowledge and expertise to guide businesses through the GST return filing process and help them to avoid errors and penalties.
GST return filing is a crucial obligation for businesses with a GST registration. If a business fails to file its GST returns by the due date, it may be liable to pay interest and late fees. It is therefore important for businesses to be aware of the GST return filing due dates, and to file their returns on time to avoid these penalties. By following the tips mentioned above, businesses can ensure that they are in compliance with the GST laws and avoid any unnecessary interest and late fee charges.
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