Demand of Late fee/Interest under section 75 of GST Act.

If a taxpayer has already paid the tax, interest, and late fees—and the GST portal has successfully accepted the filing—a tax officer cannot legally re-demand late fees or interest after more than 3 financial years have passed, provided there was no SCN issued within the statutory limitation period under Section 73/74. Such arbitrary demands outside the limitation window are legally unsustainable.

A demand under Section 75 of the GST Act typically arises from a show cause notice for unpaid tax, interest, or late fees where the officer is quantifying the liability. Two components are usually in such demands:

LATE FEE (Section 47): Rs 50 per day (Rs 25 CGST + Rs 25 SGST) for returns filed late with tax liability, or Rs 20/day for nil returns. Total late fee cannot exceed the tax payable in the return. Several periods also had late fee waiver schemes ,  check if any apply to your tax period.

INTEREST (Section 50): 18% per annum on tax paid late. From January 2026, interest on delayed tax payment is calculated only on the cash component (not the ITC portion used to discharge the liability), which is a significant change from earlier practice.

What to do when you get such a demand:
1. Review the SCN carefully. The demand cannot exceed the amounts stated in the SCN (Section 75(7)).
2. You have 30 days from receipt of the SCN to reply. File your reply explaining why the demand is incorrect or making partial admission.
3. For any admitted amounts (late fee + interest you agree with), file GSTR-DRC-03 proactively before the hearing. This shows bona fide compliance and often reduces the penalty exposure.
4. Check if any GST amnesty scheme is currently running for waiver of late fees ,  the GST Council has historically granted these for various tax periods.

For a step-by-step on GST notice responses, see this [GST compliance guide](https://taxgarden.in/blog/gst-compliance-guide-india-2026-27).