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CA Intermediate · Taxation · Payment of Tax

Gupta Enterprises paid its GST for the month of March 2026 on 20 April 2026, and the due date was 20 April 2026. Its tax of Rs 2,00,000 was paid on time. For another month, Gupta's net cash tax liability of Rs 3,00,000 was paid 10 days late. Under the CGST Act, interest on delayed payment is at what annual rate, and what is the interest for the late payment (rounded to nearest rupee, 365 days)?

The rate is 18% per annum, so interest is Rs 3,00,000 x 18% x 10/365, which is about Rs 1,479. The 24% rate is reserved for wrongly availed or utilised credit and excess reduction of output tax, not for ordinary late payment.

  1. A18% p.a.; Rs 1,479Correct
  2. B24% p.a.; Rs 1,973
  3. C18% p.a.; Rs 14,795
  4. D12% p.a.; Rs 986

Explanation

Interest on delayed payment of tax is 18% per annum. Interest = 3,00,000 x 18% x 10/365 = Rs 1,479 (1,479.45). The 24% rate applies to undue or excess claim of input tax credit or excess reduction in output liability, which is a different case. Rs 14,795 results from using 100 days instead of 10.

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