How Is GST Interest Calculated? A Simple Guide with Examples
A delayed GST payment can add to your business costs. Understanding how interest works helps you calculate the amount accurately and plan your payments better. The calculation needs three inputs: the amount on which interest applies, the annual interest rate, and the number of days involved. What is GST interest? GST interest arises when tax remains unpaid beyond its due date. Interest can also apply when input tax credit (ITC) has been wrongly availed and utilised. For delayed tax payments, interest generally starts from the day after the payment due date. For wrongly availed and utilised ITC, the relevant period runs from utilisation until reversal or payment, as prescribed under Rule 88B. GST interest handbook Which interest rate applies? The general annual rate is 18% for delayed GST payments and 18% for wrongly availed and utilised ITC . The infographic’s 24% figure for ITC needs updating: the notified rate was reduced to 18%, retrospectively from 1 July 2017. Merely availing inc...