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CA Intermediate · Taxation · Returns

Kaveri Textiles, Surat, a regular taxpayer, filed its GSTR-3B for a month 10 days after the due date. Its net cash tax liability for that month was Rs 40,000 and it had no other liability in the return. Under the CGST Act, which of the following correctly describes the consequence of this delay, apart from late fee, ignoring any waiver notification?

Interest at 18% per annum applies on the net tax payable in cash, here Rs 40,000, for 10 days, which comes to about Rs 197. Tax already paid through input tax credit is excluded from the base. The 24% rate relates to wrongly availed or utilised ITC, not this case.

  1. AInterest at 18% per annum on Rs 40,000 for 10 days, which is about Rs 197Correct
  2. BInterest at 18% per annum on the whole tax liability including the portion paid through input tax credit, for 10 days
  3. CInterest at 24% per annum on Rs 40,000 for 10 days
  4. DNo interest, because only late fee applies for delayed returns

Explanation

Interest on delayed payment of tax is 18% per annum, and for a late GSTR-3B it is charged on the tax payable in cash, that is, the net liability after ITC. Calculation: 40,000 x 18% x 10/365 = Rs 197.26, about Rs 197. Option B is wrong because the portion discharged through ITC is excluded. Option C uses the 24% rate, which applies to undue or excess ITC and excess reduction in output tax.

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