Interest under GST – Late Reporting of Invoice vs Late Filing of Return
Under GST, interest is charged for delay in payment of tax and not merely for delay in filing the return, as provided under Section 50 of the CGST Act, 2017. Even when sufficient ITC is available in the Electronic Credit Ledger, the applicability of interest depends on whether the tax liability was reported on time or reported later.
Late Reporting of Invoice- Late reporting occurs when an invoice is not disclosed in the return of the correct tax period and is instead reported in a subsequent return or discharged through Form GST DRC-03. In such cases, the tax itself remains undisclosed and unpaid by the due date. Therefore, interest is payable on the entire tax amount, even if sufficient ITC was available.
Example: -An invoice of April involving GST of ₹18,000 is not reported in April GSTR-3B and is reported in May.
👉 Interest is payable on ₹18,000 👉 ITC availability does not reduce interest
Late Filing of Return -Late filing refers to a situation where the invoice is correctly reported in the return of the appropriate tax period, but the return is filed after the due date. In this case, the tax liability is already disclosed on time. As per the proviso to Section 50(1), interest is applicable only on the net cash liability. If the entire tax is discharged through ITC, no interest is payable.
Example: An invoice of April involving GST of ₹18,000 is correctly reported in April GSTR-3B, the return is filed late, and ITC of ₹18,000 is available.
👉 No interest is payable, as the net cash liability is NIL
Under GST, interest is charged for delay in payment of tax and not merely for delay in filing the return, as provided under Section 50 of the CGST Act, 2017. Even when sufficient ITC is available in the Electronic Credit Ledger, the applicability of interest depends on whether the tax liability was reported on time or reported later.
Late Reporting of Invoice- Late reporting occurs when an invoice is not disclosed in the return of the correct tax period and is instead reported in a subsequent return or discharged through Form GST DRC-03. In such cases, the tax itself remains undisclosed and unpaid by the due date. Therefore, interest is payable on the entire tax amount, even if sufficient ITC was available.
Example: -An invoice of April involving GST of ₹18,000 is not reported in April GSTR-3B and is reported in May.
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