How GST interest on late payment is calculated in 2026: 18% a year, on the cash part, by the day

Last updated 11 Oct 2026 · India

Last checked: 11 Oct 2026 against Notification 13/2017-Central Tax and GST portal: GSTR-3B user guide (interest on net cash liability).

Short answer. If you file GSTR-3B late, interest is 18% a year (section 50(1) of the CGST Act, Notification 13/2017-Central Tax) on the part of the tax you pay in cash, for the days from the due date until you file (Rule 88B(1); rate in Notification 13/2017-Central Tax, 28 June 2017, in force from 1 July 2017). Tax paid from input tax credit attracts no interest, unless the return is filed after proceedings under section 73 or 74 have started. Input tax credit that was wrongly availed and actually used attracts 18% under section 50(3), from the date of use until reversal. Formula: cash tax × 18% × days late ÷ 365.

“the Central Government, on the recommendations of the Council, hereby fixes the rate of interest per annum, for the purposes of the sections as specified in column (2) of the Table below”
— Notification No. 13/2017-Central Tax, 28 June 2017 (Table: sub-section (1) of section 50, 18 per cent) (checked 13 Oct 2026)

Why interest is charged

GST you collect from customers belongs to the government from the due date. Interest compensates for the days you kept it. It is not a penalty, and it applies even when the delay is a day or two.

Worked examples

Case	Calculation	Interest
Monthly filer, September 2026 GSTR-3B due 20 Oct, filed 30 Oct; ₹40,000 paid in cash, ₹60,000 from ITC	₹40,000 × 18% × 10 ÷ 365	about ₹197
QRMP filer in a 22nd-group state, Jul–Sep 2026 return filed 1 Nov instead of 22 Oct; ₹1,20,000 in cash	₹1,20,000 × 18% × 10 ÷ 365	about ₹592
₹50,000 of ITC claimed by mistake, credit ledger never fell below ₹50,000	Not "utilised", so no s.50(3) interest; reverse the credit	₹0

Count the days from the day after the due date. Figures are rounded; your actual liability depends on the exact dates and amounts.

When is wrong ITC "utilised"?

Rule 88B(3) says wrongly availed credit counts as used only when the balance in your electronic credit ledger falls below the wrong amount, and only to the extent it falls below. Interest runs from that date (or the GSTR-3B due date or filing date, whichever is earlier, if the fall came from paying tax in a return) until you reverse it or pay the tax. The 24% figure you may see in older articles was reduced to 18% retrospectively from 1 July 2017 by the Finance Act 2022.

How to pay it

Declare and pay interest in the GSTR-3B for the period, or
Pay it through DRC-03, for example when the portal sends a DRC-01B intimation that your GSTR-1 tax is higher than your GSTR-3B tax (Rule 88C).

Common mistakes

Charging interest on the gross tax. For a late return, only the cash portion carries interest (unless proceedings had started).
Using 24% for wrong ITC. The rate is 18%, and only on credit actually utilised.
Counting months, not days. GST interest runs by the day, unlike TDS interest, where part of a month counts as a month.
Forgetting interest when paying a shortfall later. Unpaid tax carries interest from its original due date (Rule 88B(2)).
Waiting for the officer to work it out. Paying interest yourself with the tax closes the matter faster.

Checklist before a late GSTR-3B

Due date for your filing type and state confirmed
Cash and ITC split known
Days late counted
Interest = cash × 18% × days ÷ 365, added to the return
Late fee for GSTR-3B checked too
Any wrong ITC reversed, with interest if utilised

Due dates: GSTR-3B (20th monthly; 22nd or 24th quarterly) and GSTR-1 and IFF.

Frequently asked questions

What is the interest rate on late GST payment?

18% per annum under section 50(1) of the CGST Act, as notified by Notification 13/2017-Central Tax.

Is GST interest charged on the full tax or only on cash?

For a return filed late, on the tax paid by debiting the electronic cash ledger (Rule 88B(1)), unless the return is filed after proceedings under section 73 or 74 have started.

What is the interest rate on wrongly availed ITC?

18% per annum, and only on input tax credit that was wrongly availed and utilised, from the date of utilisation until reversal or payment.

How do I calculate GST interest?

Tax paid in cash × 18% × number of days late ÷ 365.

Official sources

Not tax or legal advice. This is a free explainer of public rules; deadlines and rules can change by notification, so confirm on the official portal or with your CA before you file. Last checked 11 Oct 2026.

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