GST Advisory

Late Fee under CGST Act, 2017 with the Latest Amendments

Section 47 and 50 of the CGST Act 2017 lays down the late fee and the interest payable under the CGST Act. The Indian Government made certain amendments to Section 47 (late fee under CGST Act) with a view to reduce the maximum cap of late fee. In this article, we shall discuss the recent changes introduced in the CGST Act pertaining to late fee and interest.

Understanding Section 47 of the CGST Act: Late Fee under CGST Act, 2017

Section 47 of the Act comprises of provisions that deal with levy of late fees for the registered person who fails to file GST returns on time as prescribed.

Under this section late fee is explained as follows:

• Late fee in case of failure to furnish details of outward or inward supplies, monthly return or final return- 100 rupees for each day during which such failure continues provided to a maximum amount of 500 rupees.
• Late fee in case of failure to furnish annual return- 100 rupees for every day during which such failure continues subject to a maximum of an amount calculated at a quarter % of his turnover in the state/UT, where he is registered.

Latest amendment in Section 47 of the Act: Late Fee under CGST Act, 2017

As per latest amendment notified through a notification are as under:

Late fee payable under section 47 of the Act for June 2021 onwards or quarter ending June, 2021 onwards, who fail to produce the details regarding outward supplies in form GSTR-3B by the due date:

CLASS OF REGISTERED PERSON	AMOUNT
Who has a nil outward supply in the tax period	250 rupees
Who has an aggregate turnover of up to 1.5 crore rupees in the preceding financial year	1000 rupees
Who has an aggregate turnover of more than 1.5 crore rupees and up to 5 crore rupees in the preceding financial year	2500 rupees

For those taxpayers that have an aggregate annual turnover in the preceding year more than 5 crore rupees, the late fee will be capped to maximum 5000 rupees under Section 47.

The late fee for not furnishing Form GSTR 3B for the tax periods from July 2017 to April 2021 is reduced/waived as provided below:

• Late fee has been capped to maximum 250 rupees for those taxpayers who did not have any tax liability for the aforementioned tax periods;
• In case of other taxpayers, the late fee has been capped to a maximum 500 rupees.

It is worth mentioning here that reduced rate of late fee will apply in case where GSTR 3B returns for these tax periods are furnished between 1^st June to 31^st August 2021.

Late fee payable under section 47 of the Act for June 2021 onwards or quarter ending June 2021 onwards, who fail to produce the details regarding outward supplies in form GSTR-1 by the due date:

CLASS OF REGISTERED PERSON	AMOUNT
Who has a nil outward supply in the tax period	250 rupees
Who has an aggregate turnover of up to 1.5 crore rupees in the preceding financial year	1000 rupees
Who has an aggregate turnover of more than 1.5 crore rupees and up to 5 crore rupees in the preceding financial year	2500 rupees

For those taxpayers that have an aggregate annual turnover in the preceding year more than 5 crore rupees, the late fee will be capped to maximum 5000 rupees under Section 47.

Interest in case of delayed payment of GST

Section 50 of the CGST Act 2017 will attract if there is any delay in furnishing GST returns apart from the late fee. A person who is liable to pay tax as per the provisions of the CGST Act, 2017^[1] or the rules made thereunder, but fails to pay tax or any part thereof or claim excess input tax credit or excess reduction in output tax liability will be required to pay interest.

The Interest rates have been discussed below:

• In case of a person liable to pay the tax fails to do so or any part thereof within the prescribed period- 18% for the period for which the tax or any part thereof remains unpaid;
• In case of a taxable person who makes either undue or excess claim of input tax credit or undue or excess reduction in output tax liability- 24% on such undue or excess claim or on such undue or excess reduction.

Conclusion

The interest payable and late fee under CGST Act 2017 have been defined under Sections 50 and 47 of the Act, respectively. The latest amendments can benefit the taxpayers as the maximum cap of the late fee has been reduced. Having said that, taxpayers should look to file GST returns on time to avoid the consequences such as late fee and interest rates.

Read our article:Amendments in GST Rule – with effect from January 1, 2021