Section 50 of the CGST Act mandates interest on any GST that is not paid by the due date. Unlike the late filing fee under Section 47, which is a fixed daily charge, interest under Section 50 is computed as a percentage of the actual tax amount outstanding.
Two interest rates apply: The standard rate for late payment of output tax liability is 18% per annum. A higher rate of 24% per annum applies where excess ITC has been wrongly claimed and utilised — i.e., where the taxpayer has used ITC to pay tax that they were not entitled to claim.
Interest cannot be paid using ITC. This is a critical distinction. Late fee, interest, and penalty under GST must all be paid in cash through challan PMT-06. They cannot be offset against the electronic credit ledger (ITC balance).
Section 50 interest computations are subject to CBIC notifications and Finance Act amendments. This calculator uses the rates as of FY 2025-26.
Frequently Asked Questions
Late fee under Section 47 is a fixed daily charge (₹50/day for GSTR-3B) for filing a return after its due date. Interest under Section 50 is a percentage of the tax not paid — it applies to the outstanding tax amount, not to the act of filing late.
This has been a contested issue. As per Finance Act 2021 amendment to Section 50(1), interest applies only on the net cash liability (tax paid by cash minus cash balance), not on the gross tax liability. However, this applies prospectively from the notification date.
Interest is paid through challan PMT-06 in cash. When filing GSTR-3B, the system auto-computes interest in Table 5.1. You can also make voluntary interest payments before filing.
Yes. The 24% rate under the proviso to Section 50(1) applies specifically where a registered person has wrongly availed or utilised ITC. For normal late payment of output tax, only 18% applies.
