18% per annum under Section 50(1) for normal delayed payment. 24% per annum under Section 50(3) for excess ITC fraudulently claimed or suppression of sales. Interest runs from the day after the due date until the day of actual payment.
How is GST interest calculated on delayed payment?+
Formula: Interest = Tax Amount × (Rate/100) × (Days Delayed/365). Example: ₹50,000 delayed by 30 days at 18% = ₹50,000 × 0.18 × (30/365) = ₹739.73. The calculation is per day and uses 365 days (not 366 in leap years).
What is the difference between interest, late fee, and penalty?+
Interest (Section 50): 18%/24% p.a. on unpaid tax — for delayed payment. Late Fee (Section 47): ₹50/day (₹20 for NIL), max ₹10,000 — for delayed return filing. Penalty (Sections 122–125): 10%–100% of tax — for fraud or evasion. All three can apply together.
Is interest charged on the full tax or net tax after ITC?+
Interest is charged on the net tax payable after ITC set-off. If you have sufficient ITC to cover your liability, no interest arises. Interest only applies to the positive tax amount that remains unpaid after utilising available ITC.
Can interest be waived if I pay before receiving a GST notice?+
Interest under Section 50 cannot typically be waived — it is a statutory charge that accrues automatically. However, under Section 73 (genuine mistakes), paying tax + interest before a show-cause notice can reduce penalties. Interest itself remains payable. Consult a CA for specific situations.