The Central Government has introduced a significant change in the manner of calculating interest on delayed GST payments. This update, notified via Notification No. 12/2024 – Central Tax dated 10/07/2024, modifies how interest is computed when filing GSTR-3B after the due date. The amendment aligns with Rule 88B of the CGST Rules, 2017, and aims to ensure fair treatment of taxpayers who maintain timely deposits in their Electronic Cash Ledger (ECL)
Rule 88B of CGST Act 2017 provides the manner of calculation of interest on late payment of GST in any case.
Previously, interest was charged on the entire tax liability paid in cash if the return was filed late even if the tax was paid in cash before due date of filing said return. With this amendment, the interest will not be charged on such cash balances lying in electronic cash ledger accumulated till due date of filing the return.
- Interest is now charged only on the portion of tax paid in cash that is deposited in the ECL after the due date.
- If the cash was already in the ledger before the due date, no interest will be levied on that amount—even if the return is filed late.
Relevant provision of the amendment is being reproduced as per below:-
“Provided that where any amount has been credited in the Electronic Cash Ledger as per provisions of sub-section (1) of section 49 on or before the due date of filing the said return, but is debited from the said ledger for payment of tax while filing the said return after the due date, the said amount shall not be taken into consideration while calculating such interest if the said amount is lying in the said ledger from the due date till the date of its debit at the time of filing return.”
GST Portal Update – Effective January 2026
As per Advisory issued by GST Portal, the functionality to calculate interest as per amended provisions will be available from January 2026 tax period. As per advisory, From January-2026 tax period onwards, the interest calculation in table 5.1 of GSTR-3B on portal has been enhanced, providing the benefit of the minimum cash balance available in the Electronic Cash Ledger of the taxpayer from the due date of return filing until the date of tax payment (offset) in line with the proviso to Rule 88B(1) of the CGST Rules, 2017.
The said change shall be applicable on the delayed returns filed for January 26’ tax period for which interest shall be auto-populated in February 26’ tax period’s GSTR-3B. The revised interest computation formula is mentioned below for better understanding of the taxpayers.
Revised Interest Computation Formula
Interest =
(Net Tax Liability – Minimum Cash Balance in ECL from due date to date of debit) × (No. of days delayed / 365) × Applicable Interest Rate
Source: GST Portal
