Section 50 of the CGST Act, 2017 — Interest on Tax Paid Late

Work out the interest and late fee on a late return

Enter your own figures in the calculator on this page: GST late fee & interest calculator, under Central Goods and Services Tax Act, 2017, ss. 47 & 50.

• GST late fee & interest calculator, with the method and worked examples

• GST late fee & interest calculator, with the method and worked examples

The text of Section 50

50. Interest on delayed payment of tax.— (1) Every person who is liable to pay tax in accordance with the provisions of this Act or the rules made thereunder, but fails to pay the tax or any part thereof to the Government within the period prescribed, shall for the period for which the tax or any part thereof remains unpaid, pay, on his own, interest at such rate, not exceeding eighteen per cent., as may be notified by the Government on the recommendations of the Council: Provided that the interest on tax payable in respect of supplies made during a tax period and declared in the return for the said period furnished after the due date in accordance with the provisions of section 39, except where such return is furnished after commencement of any proceedings under section 73 or section 74 or section 74A in respect of the said period, shall be payable on that portion of the tax which is paid by debiting the electronic cash ledger. (2) The interest under sub-section (1) shall be calculated, in such manner as may be prescribed, from the day succeeding the day on which such tax was due to be paid. (3) Where the input tax credit has been wrongly availed and utilised, the registered person shall pay interest on such input tax credit wrongly availed and utilised, at such rate not exceeding twenty-four per cent. as may be notified by the Government, on the recommendations of the Council, and the interest shall be calculated, in such manner as may be prescribed.

What the section does

• A person who fails to pay tax, or any part of it, within the period prescribed pays interest on the amount that remains unpaid, for the period it remains unpaid.
• The rate is 18% a year for ordinary delay in payment. Where input tax credit has been wrongly availed and utilised, sub-section (3) charges interest on it too — also at 18% a year as notified, from the date the credit was used until it is reversed or the tax is paid (rule 88B). Credit that was availed but never used attracts no interest.
• Where the return for a period is furnished after the due date, interest is payable on the part of the liability discharged in cash, rather than on the gross liability — the proviso to sub-section (1), which was given effect from 1 July 2017.
• Interest runs by operation of the section. It does not wait for an assessment, a notice or a demand.

Interest

18% a year. Also 18% on input tax credit wrongly availed and utilised, from the date of use (s.50(3), rule 88B).

Where people go wrong

• Treating interest as negotiable. It arises from the section, and the department recovers it as tax.
• Computing 18% on the gross liability for a late return. Where the return is filed late, the proviso limits interest to the portion paid in cash.
• Quoting 24% for wrongly used credit. The section allows up to 24%, but the rate notified for sub-section (3) is 18%, and it has been read that way since 1 July 2017 after the Finance Act, 2022.
• Assuming the late fee under section 47 covers it. The late fee is for the return; this is for the money.

Common questions

What is the interest rate for late GST payment?

18% a year under section 50(1) of the CGST Act, 2017, for the period the tax remains unpaid. Where input tax credit has been wrongly availed and utilised, section 50(3) charges interest at 18% a year from the date the credit was used, under rule 88B. The Act allows up to 24%, but 18% is the rate notified.

Is GST interest charged on the gross or the net liability?

Where the return for the period is furnished after the due date, the proviso to section 50(1) charges interest on the portion of the liability discharged in cash. That proviso was given retrospective effect from 1 July 2017.

Does GST interest need a notice before it applies?

No. The liability arises under the section itself for the period the tax is unpaid, which is why a delay discovered during a later reconciliation still carries interest for the whole period.

Act on this

• Section 47 — the late fee for the return itself
• Compliance calendar
• GST ASMT-10 notice — reply format
• GST DRC-01 show cause notice — reply format
• DRC-07 demand order — appeal time limit

• Section 47 — the late fee for the return itself
• Compliance calendar
• GST ASMT-10 notice — reply format
• GST DRC-01 show cause notice — reply format
• DRC-07 demand order — appeal time limit

Other provisions

• Section 16, Central Goods and Services Tax Act
• Section 47, Central Goods and Services Tax Act
• Section 44, Central Goods and Services Tax Act
• Section 107, Central Goods and Services Tax Act
• Section 74A, Central Goods and Services Tax Act
• Section 9, Digital Personal Data Protection Act

• Section 16, Central Goods and Services Tax Act
• Section 47, Central Goods and Services Tax Act
• Section 44, Central Goods and Services Tax Act
• Section 107, Central Goods and Services Tax Act
• Section 74A, Central Goods and Services Tax Act
• Section 9, Digital Personal Data Protection Act

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Maintains the law explainers, calculators, templates and blog posts on vidhisar.in: checks them against the statute text and updates them when the law changes. Errors and changes in the law can be reported to legal@vidhisar.in.

• Official text: The Central Goods and Services Tax Act, 2017 (India Code)
• Report an error or a change in the law: legal@vidhisar.in

About this summary

The section in its own words, with a plain-English explanation of what it requires. Not legal advice: take advice on anything turning on your own facts.