Penalty and interest rate by gst department for delayed payments
This query is : Resolved
08 July 2025
I am writing to seek clarification on the penalty and interest rate applicable in case a party fails to make GST payments within the due date. Specifically, I would like to know:
1. If a party fails to pay GST within 180 days, what is the penalty that will be levied by the GST department?
2. If the payment is delayed for more than 2 years, what is the interest rate and penalty rate that will be applicable?
I would appreciate it if you could provide me with a detailed response at the earliest.
Please clarify the relevant sections of the GST Act and rules that apply to this scenario.
1. If a party fails to pay GST within 180 days, what is the penalty that will be levied by the GST department?
2. If the payment is delayed for more than 2 years, what is the interest rate and penalty rate that will be applicable?
I would appreciate it if you could provide me with a detailed response at the earliest.
Please clarify the relevant sections of the GST Act and rules that apply to this scenario.
08 July 2025
Please reply me urgently for clarification of above matter
12 August 2025
1. If GST payment is delayed within 180 days:
Interest:
Under Section 50(1) of CGST Act, interest is payable on the amount of tax not paid from the due date till the date of payment.
Rate: 18% per annum (simple interest)
Calculated on a daily basis from the day after due date until payment date.
Penalty:
Usually, no penalty if tax and interest are paid within 30 days after due date (voluntary compliance window).
2. If GST payment is delayed beyond 180 days:
The law does not specifically mention a different penalty after 180 days for normal delayed payments.
But under Section 74 (for cases of tax evasion) or Section 122 (general penalties), higher penalties may apply if deliberate evasion or fraud is found.
If the delay continues for over 180 days (about 6 months), the department may initiate penalty proceedings or issue a show cause notice.
3. If payment is delayed for more than 2 years:
If the department initiates action under Section 73 (non-fraud cases) or Section 74 (fraud cases) for assessment of tax not paid, then:
Interest: 18% p.a. from due date till actual payment (Section 50)
Penalty:
In case of no fraud: penalty equal to amount of tax due (Section 73)
In case of fraud or willful evasion: penalty can be 100% to 300% of tax amount (Section 74)
Also, additional penalty under Section 122 can be levied for other contraventions.
Interest:
Under Section 50(1) of CGST Act, interest is payable on the amount of tax not paid from the due date till the date of payment.
Rate: 18% per annum (simple interest)
Calculated on a daily basis from the day after due date until payment date.
Penalty:
Usually, no penalty if tax and interest are paid within 30 days after due date (voluntary compliance window).
2. If GST payment is delayed beyond 180 days:
The law does not specifically mention a different penalty after 180 days for normal delayed payments.
But under Section 74 (for cases of tax evasion) or Section 122 (general penalties), higher penalties may apply if deliberate evasion or fraud is found.
If the delay continues for over 180 days (about 6 months), the department may initiate penalty proceedings or issue a show cause notice.
3. If payment is delayed for more than 2 years:
If the department initiates action under Section 73 (non-fraud cases) or Section 74 (fraud cases) for assessment of tax not paid, then:
Interest: 18% p.a. from due date till actual payment (Section 50)
Penalty:
In case of no fraud: penalty equal to amount of tax due (Section 73)
In case of fraud or willful evasion: penalty can be 100% to 300% of tax amount (Section 74)
Also, additional penalty under Section 122 can be levied for other contraventions.
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