Interest calculator in GSTR-3B

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Interest calculator in GSTR-3B

To ease up the return filing process under GST, The Goods and Services Tax Network is planning to release interest calculator functionality in monthly tax payment form GSTR-3B to help taxpayers in calculating interest for delayed tax payment.

The present article enables the reader to understand the term GSTR-3B and the new functionality of the Interest calculator in GSTR-3B for delayed monthly tax payment.

Gist of Notification

To facilitate taxpayers in doing self-assessment, the new functionality of the interest calculator is being released in GSTR-3B.

  • This functionality will assist taxpayers in calculating the interest applicable for delayed filing of returns.
  • Taxpayers will have to verify and discharge the correct interest liability as per law, as payment of interest is statutory compliance
  • This functionality will be made available on the GST Portal shortly, adding it will improve ease in filing returns

GSTR-3B

GSTR 3B is a monthly self-declaration that has to be filed by every person who has registered for GST.

Every registered taxpayer needs to file a separate GSTR 3B for each GSTIN they possess including nil returns.

  • The GST liability must be paid on or before the date of filing GSTR-3B, earlier than its due date
  • The GSTR-3B once filed cannot be revised. Even in case of a zero liability, GSTR-3B must be compulsorily filed

For more details on GSTR-3B Return – Online Filing Procedure, click here

Late Fee & Penalty

A late fee is charged for filing GSTR-3B of a tax period after the due date. It is levied as follows:

  • Rs. 50 per day of delay
  • Rs. 20 per day of delay for taxpayers having nil tax liability for the month

Interest for Delayed Monthly tax Payment

As per Goods and Services Tax law, 18% interest is charged for failure to pay tax liability on time, while 24% interest is levied for an undue or excess claim of input tax credit (ITC) or reduction of output tax liability.

Features of New Functionality – Interest calculator in GSTR-3B

To facilitate taxpayers in doing self-assessment, the new functionality of the interest calculator is being released in GSTR-3B.

  • This new functionality will compute the minimum interest applicable on the basis of the values declared by the taxpayers in GSTR-3B for a particular tax period, which provides the technology backbone for the indirect tax regime.
  • This functionality of the Interest calculator has a user-friendly interface, which informs the taxpayers regarding the manner of system computation of interest values for each tax head.

The interest calculator also assists the taxpayers in doing the correct computation of interest for the liability of any past period declared in the GSTR-3B for the current tax period, based on the details furnished by them on the portal.

Computation of Interest for Delayed Monthly tax Payment

The interest calculator in GSTR-3B will compute the minimum interest applicable on the basis of the values declared by the taxpayers in GSTR-3B for a particular tax period.

  • This system computed interest will be auto-populated in Table-5.1 of GSTR-3B for the next tax period, the way it is done for the late fees at present.
  • The system computed interest values auto-populated in the next GSTR-3B return will be kept editable, initially.

However, the system-generated PDF of failed GSTR-3B will contain both values: the System computed interest, and the user paid interest values.

Interest liability

Interest liability can arise in cases of either of the following, or both :

Delayed filing of return

If the present GSTR-3B is filed after the ‘due date’, then interest will be applicable at the prescribed rate of interest from the ‘due date’ of GSTR-3B for the relevant period i.e. till the date of filing of the return.

Delayed declaration of liability

If the liability pertaining to previous tax periods is discharged in the present GSTR-3B, then the 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 in the present GSTR3B, then the 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

New features in GSTR 3B

The  new features in GSTR 3B with the introduction Interest calculator in GSTR-3B for delayed monthly tax payment is given here:

Tax Liability Break-up (Voluntary) button in GSTR-3B

A new button called Tax Liability Break-up (Voluntary) will be provided in GSTR-3B for furnishing the tax-period-wise break-up of tax liability. This button will appear in GSTR-3B on the payment page, below Table 6.1 – Payment of tax.

The Tax Liability Break-up (Voluntary) button will be enabled only after clicking the ‘Make payment/Post credit to ledger’ button. In other words, the break-up of the tax period wise values can be furnished by the taxpayers after making payment of the liability for this period

If the taxpayers click on this button, they will be provided with an option of declaring tax period-wise break-up of the tax liability discharged by them in this GSTR-3B. The values could be declared head-wise, and the total value for all the tax periods put together should be equal to the tax liability paid in the GSTR-3B

On clicking the Save button, the option to File GSTR-3B through EVC or DSC will be enabled

Auto-population of System Computed interest in next GSTR-3B

After filing this GSTR-3B, the system will compute the interest liability on the basis of the values declared in this GSTR-3B. This computation will be done in accordance with the provisions of Section-50 of the Act, as amended.

Interest will be computed for each tax period as per the following formula :

Interest liability = Tax liability X( Number of days since the Due date till the actual date of filing GSTR-3B / Number of days in the year) X Rate of interest

Depending on the number of tax periods declared by the taxpayer in the tax-period-wise breakup, the interest liability for each tax period will be calculated separately as per this formula. The interest values for different periods will then be added, and the total interest liability will be computed for each head by the system.

New Information in GSTR-3B filing

  • After the filing, the PDF of the filed GSTR-3B is generated by the system, which can be downloaded by the users.
  • In this PDF document, in addition to the information presently shown, the PDF will also consist of information pertaining to system computed interest, in case it is applicable in that GSTR-3B.
  • This information will include the head-wise details of computation of interest, for all the tax periods on which interest is applicable

Auto-population of interest

The interest values computed above will be auto-populated in Table 5.1 – Interest and Late fee for the previous tax period of GSTR-3B of the next tax period. The break-up and the manner of interest computation can be viewed by clicking the System Generated GSTR-3B button on this page

  • This is on the lines of the auto-population of late fees for the previous tax period in the subsequent tax period.
  • Just like the system-computed, late fees are auto-populated in the next tax period, now the system-computed interest will also be populated in the GSTR-3B of the next tax period.
  • The system computed values will also be displayed to the user on mouse-hovering

Changes in GSTR 3B user experience

Changes in GSTR 3B user experience with the introduction of the Interest calculator in GSTR-3B is given here:

Taxpayers filing on or before Due date of GSTR-3B

  • After the interest calculator is enabled on the GST Portal, there will be no change in the user experience for the taxpayers who file their returns on or before the ‘due date’.
  • The taxpayer would still have the facility to provide the break-up of liability of the past period.

Taxpayer filing GSTR-3B after Due date

For taxpayers who are filing after the ‘due date’, a pop-up will be shown regarding the option to declare tax-period-wise tax liability, if applicable to them.

  • 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 facilitation measure is expected to assist the taxpayers by helping them with the calculation of correct interest while filing of GSTR-3B and will thus improve ease in filing returns under GST.

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Post by Renu Suresh

Renu is experience content writer specialised in compliances and company rules.