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).

If the tax, interest and late fee were correctly paid and the payment was appropriated against the relevant liability, the officer should not demand the same amount again. However, check the payment challan/ledger and the return or order to confirm that the amount was credited to the correct GSTIN, tax period and liability head; system acceptance alone does not establish that the demand was fully discharged.

The fact that three financial years have passed does not, by itself, bar a demand. The applicable time limit depends on the type of proceeding, relevant tax period and whether a notice or order was issued within the prescribed period. Share the tax period, payment details and notice/order date to assess whether the demand is a duplicate or time-barred.

Resolving a GST demand depends on reconciling the return, electronic ledgers, challan and the officer’s demand records. Manual reconciliation across periods is difficult; automation can reduce repetitive checks while professional judgment remains in control. Our platform brings together 2,000+ AI agents and 650+ integrations for relevant GST reconciliation and compliance workflows. For a walkthrough of how it may fit your process, connect with us on WhatsApp at https://wa.me/message/3HVOZ7HIY4ESC1.