Late Fees under GST: Why are Late Fees Levied? How to Deposit Late Fees? Can a Late Fee under GST be Waived?
Since its inception, the Goods and Services Tax (GST) has become an important aspect of the Indian Tax System. However, because of the complexities involved in the implementation of GST, businesses frequently struggle to navigate the GST framework smoothly. The imposition of penalties for noncompliance with GST regulations is a critical aspect that businesses should be aware of.
This article aims to provide insights on the penalties and late fees regulation pertaining to non-compliance with GST.
Table of Content
Why are Late Fees levied under GST?
Under the Goods and Services Tax (GST) regime, late fee is charged for delay in the filing of GST returns. The late fees are imposed under GST to ensure timely compliance of various rules and regulations under GST. The GST Council in and the Central Board of Indirect Taxes and Customs (CBIC) issues notifications and circulars from time to time with respect to changes or waiver of late fees under GST.
Late Fees for various GST Returns
The late fees for various GST returns are presented in a tabular format as below:
Steps to Deposit Late Fees under GST
Under the GST regime, depositing late fees is a part of the GST filing process. The general steps to deposit the late fees are as follows:
Login to GST portal: Access the GST portal at https://www.gst.gov.in/ and login using the credentials.
Navigate to the Returns Dashboard: After logging in, go to the ‘Services’ menu, then ‘Returns’ and finally ‘Returns Dashboard’. Here, the financial year and the return filing period must be selected for which the return is to be filed.
Access the Return Form: Select the return type for which the late fee is payable. The system will redirect to the respective return page.
Complete the Requisite Details: Completely fill the details as required in the return form. If the return is filed after the due date, the system will automatically compute the late fees based on the number of days of delay.
Late Fee Determination: The auto-computed late fee is displayed in the ‘Liabilities’ section of the return form. Validate the late fees amount.
Payment of Late Fee: If there is a sufficient balance in the Electronic Cash Ledger, the late fee payable can be offset directly. If not, the payment is to be made. To complete the payment, navigate to the ‘Payment of Tax’ tab, and validate the late fee liability under the heading ‘Late Fee’.
Create Challan for Late Fee Payment: If payment is to be made, select the ‘Create Challan’ option from the ‘Payment of Tax’ tab. Fill out the requisite details and choose the method of payment.
Make Payment: Use the preferred payment method to complete the transaction. Upon successful payment, the same is reflected in the Electronic Cash Ledger.
Offset the Liabilities: Re-visit the ‘Payment of Tax’ tab and select the ‘Offset Liability’ button to offset the balance in the Electronic Cash Ledger with the late fee payable.
Final Submission: After the payment of late fee, confirm and submit the return. Depending on the type of GST return, an option to sign it digitally or using an EVC (Electronic Verification Code) will appear.
Receipt of Confirmation: After submitting the return, a confirmation message is displayed, and an acknowledgement receipt is generated. This receipt should be saved for future reference.
Waiver of Late Fees
In order to lessen the burden of compliance on taxpayers under certain circumstances, the Goods and Service Tax (GST) Council occasionally reviews and implements waivers or reductions of late fees. Examples of such circumstances include: natural disasters, technical difficulties with GST portal, or such other exceptional situations. The Central Board of Indirect Taxes and Customs (CBIC) notifies the public of these waivers through official notifications.
Late Fees vs Penalties
Following are the differences between the late fees and penalties under GST:
Late Fees vs Interest
The difference between the late fees and interest under GST is presented as below:
FAQ
Q1. Is it compulsory to file returns under GST, even if there is no purchase and sale transaction during the period?
Yes. All registered persons under GST, are compulsorily required to file the return irrespective of sale or purchase transaction during a particular period.
Q2. What is the consequence of non-filing the GST return?
Non-compliance with the GST return procedural part will result in the levy of late fees which would be determined on a per day basis of default. Also, any amount payable towards GST would attract an interest at the rate of 18% per annum.
Q3. What is the late fee for GSTR-3B?
If GSTR-3B is a nil return, the applicable late fee is INR 20 per day (INR 10 CGST + INR 10 SGST/UTGST). However, the late fee applicable in all other cases is INR 50 per day (INR 25 CGST + INR 25 SGST/UTGST).
Q4. What happens if a taxpayer does not pay the applicable late fees under GST while filing the GST return?
The late fee under GST gets accumulated on the next return. Moreover, the GST system prohibits from continuing to file any GST return and also from operating the business.
Q5. How to deposit late fees under GST with the Government?
The GST late fees is to be paid along with the filing of GST return. Moreover, the late fee is to be paid only through the Electronic Cash Ledger and not through the Electronic Credit Ledger.
Q6. Can a late fee under GST be reduced or waived?
Yes. The power to reduce or waive the late fee under GST lies with the GST Council who in consultation with the CBIC reviews and implements the waiver and reduction in the late fees.
Q7. How is the late fee computed under GST?
The late fee under GST is automatically computed at the time of filing the GST return. Such a late fee is determined on a per-day basis based on the number of days delay in filing the GST return.
Q8. Can a taxpayer make use of balance Input Tax Credit (ITC) for the payment of late fees?
No. The payment of late fees under GST is to be made through the Electronic Cash Ledger only. The balance of ITC cannot be utilized to offset the liability of GST late fees.
