GST Interest Calculator

GST Interest Calculator
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GST Interest Calculator

Interest Calculator – A much-needed improvement

It was becoming difficult to calculate interest on delayed payment of GST and most of the businesses have been delaying their payment of GST and not paying interest thereon. As there was no check/ compulsion to make payment of Interest.  There were certain taxpayers who were paying interest while furnishing returns in Form GSTR-3B but such taxpayers were receiving notices from GST Department raising concerns over the difference in interest calculated by the department vs. interest paid by the taxpayer.

Therefore, new functionality has been introduced by the GSTN which will assist the taxpayers in calculating the correct interest on the basis of the tax liability value declared by the taxpayers in GSTR-3B.

As per the advisory issued on the GSTN dated 8th January 2022, the interface will be user-friendly and will inform taxpayers about the calculation of Interest values for each tax head.

 

Computation of Interest

Interest will be calculated in 2 cases: –

Delayed Filing of GSTR-3B

Where the tax liability is declared in the same tax period but GSTR-3B is filed after the due date.

Interest will be calculated on the amount of tax liability adjusted towards the Electronic Cash Ledger (aligned with amended Section 50)

Delayed Declaration of Liability

Where the tax liability is declared in later tax period GSTR-3B.

Interest will be calculated on the amount of entire tax liability either adjusted towards the Electronic Cash Ledger or Electronic Credit Ledger

 

Auto – Population of system computed interest

The figures of Interest on Delay in GST will be auto-populated on the basis of values declared by the taxpayer. This means that the taxpayers need to be more vigilant or accurate in declaring the values in GSTR-3B.

The Auto- population of Interest will be the same as the auto-population of Late Fees. The only difference will be that no input is required by the taxpayer for correct auto-population of Late Fees but in case of Interest, the values declared by the taxpayer will be the basis of calculation of Interest.

The system computed interest will be auto-populated in Table No. 5.1 of GSTR-3B of next period. Initially, the figures of Interest will be editable and not fixed but the system-generated PDF of GSTR-3B will contain both the System Computed figures and user-paid figures of Interest.

Particulars

Late Fees Interest
Taxpayer’s Input Values declared by the taxpayer not relevant

Values declared by taxpayer relevant

Editable

Late Fees is not editable and has to be paid in next month GSTR-3B

At present, Interest values are editable and not fixed

Changes in taxpayers’ experience – How to declare values

As explained above, the taxpayers need to declare their liability and then the system will compute the Interest on Delayed payment.

For such declaration, a new button will be enabled on the ‘Payment Page’ after Table 6.1 as “Tax Liability break- up (Voluntary)”.

This button will be enabled after clicking the ‘Make Payment/ Post credit to ledger’ button.

In the new button “Tax Liability break- up (Voluntary)”, the taxpayer shall declare the liability according to the corresponding previous tax periods. The total value of tax periods shall be equal to the liability declared in GSTR-3B.

This functionality is now enabled on the GST Portal. Intimation for the same was given on the GST portal on 26.01.2022.


 


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About CA Mehul Gupta 32 Articles
Chartered Accountant in practice, Certified GST Practitioner & Commerce Graduate. He is mainly engaged in the practice of Direct taxes, GST, International taxation, & assurance services. A visiting faculty in the Faridabad Branch of ICAI.

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