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20 January 2022

New functionality added for Interest Calculation in GSTR 3B.

The new functionality of interest  calculator is being released in GSTR-3B in order to assist taxpayers in calculating interest on delayed filing of returns.

Interest calculation has been aligned with sec 50 of the CGST Act, 2017 as amended & accordingly system computed interest will be auto populated in Table 5.1 of next tax period GSTR 3B just like “late fees”. Initially this field will be editable, however the system generated PDF of filed GSTR-3B will contain both values: the System computed interest, and the user paid interest values.

System generated interest will be computed in the manner specified below:

  1. Liability of current tax period, reported in the same period of GSTR 3B, interest will be calculated on the portion of tax which is paid in cash i.e. by debiting the electronic cash ledger.
  2. Liability of previous tax period, reported in current GSTR 3B, interest will be calculated on entire liability paid by debiting the electronic cash ledge or electronic credit ledger.

A new button has been added in GSTR-3B, called Tax Liability Break- up (Voluntary), and data is to be entered by clicking this button only by those taxpayers who are making payment for liability pertaining to earlier tax-periods in the present GSTR- 3B. In cases where the present GSTR-3B consists of liability only for the present period, the taxpayers can ignore this button, and continue filing their return as usual.

Interest liability can arise either or both of the following:

  1. Delayed filing of return: If the GSTR-3B is filed after the ‘due date’, then interest will be applicable from the ‘due date’ of GSTR-3B for relevant period till the date of filing of the return at applicable rate of interest.
  2. Delayed declaration of liability: If the liability pertaining to previous tax-periods is discharged in the present GSTR-3B, then interest will be leviable from the ‘due date’ of return for the said previous period till the date of declaration of the liability in the return. Thus, as part of the interest calculator, a new feature has been provided to GSTR-3B for allowing taxpayers to voluntarily declare Tax-period wise break-up of liability. If a taxpayer is discharging liability for any past period(s) in the present GSTR- 3B, then exact tax-period wise break-up of the same can be provided by the taxpayers. The interest will be thereafter computed by the system accordingly.

A pop-up will be shown regarding the option to declare tax-period wise tax liability, for taxpayers who are filing return after ‘due date’. If they have any tax liability pertaining to any previous tax-period to declare, they may declare the same. If the entire liability pertains to the present period, then they may ignore this pop-up message, and continue their filing as usual. If no previous period tax liability is declared, by default the interest will be computed by assuming that the entire tax liability pertains to the present period.

This functionality will be made available on the GST Portal shortly. This facilitation measure is expected to assist the taxpayers by helping them with calculation of correct interest while filing of GSTR-3B and will thus improve ease in filing return under GST.