Manner of calculating interest on delayed payment of tax
Rule 88B of the CGST Rules
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How interest is computed: where the liability is declared in a return filed late, interest runs on the portion paid from the cash ledger for the period of delay; in every other case it runs on the whole unpaid tax from the due date to the date of payment. Credit wrongly availed carries interest only if it was actually utilised, from the date of utilisation.
What this means in practice
The parts that actually decide cases — the things a practitioner checks first.
Interest on a late return runs only on the cash portion; on everything else it runs on the whole tax from the due date.
Wrongly availed credit carries interest only from the date of UTILISATION – and the ledger balance decides whether it was utilised at all.
How this provision is built
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The exact words of the law
3,113 characters, uneditedReproduced from the CBIC text. We explain it above — but you should always be able to read it yourself.
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(1) In case, where the supplies made during a tax period are declared by the registered person in the return for the said period and the said return is furnished after the due date in accordance with provisions of section 39 , except where such return is furnished after commencement of any proceedings under section 73 or section 74 3 [or section 74A] in respect of the said period, the interest on tax payable in respect of such supplies shall be calculated on the portion of tax which is paid by debiting the electronic cash ledger, for the period of delay in filing the said return beyond the due date, at such rate as may be notified under sub-section
(1) of section 50 . 2 [ Provided that where any amount has been credited in the Electronic Cash Ledger as per provisions of sub-section
(1) of section 49 on or before the due date of filing the said return, but is debited from the said ledger for payment of tax while filing the said return after the due date, the said amount shall not be taken into consideration while calculating such interest if the said amount is lying in the said ledger from the due date till the date of its debit at the time of filing return.]
(2) In all other cases, where interest is payable in accordance with sub section
(1) of section 50 , the interest shall be calculated on the amount of tax which remains unpaid, for the period starting from the date on which such tax was due to be paid till the date such tax is paid, at such rate as may be notified under sub-section
(1) of section 50 .
(3) In case, where interest is payable on the amount of input tax credit wrongly availed and utilised in accordance with sub-section
(3) of section 50 , the interest shall be calculated on the amount of input tax credit wrongly availed and utilised, for the period starting from the date of utilisation of such wrongly availed input tax credit till the date of reversal of such credit or payment of tax in respect of such amount, at such rate as may be notified under said sub-section
(3) of section 50 . Explanation.-For the purposes of this sub-rule, –
(1) input tax credit wrongly availed shall be construed to have been utilised, when the balance in the electronic credit ledger falls below the amount of input tax credit wrongly availed, and the extent of such utilisation of input tax credit shall be the amount by which the balance in the electronic credit ledger falls below the amount of input tax credit wrongly availed.
(2) the date of utilisation of such input tax credit shall be taken to be, –
(a) the date, on which the return is due to be furnished under section 39 or the actual date of filing of the said return, whichever is earlier, if the balance in the electronic credit ledger falls below the amount of input tax credit wrongly availed, on account of payment of tax through the said return; or
(b) the date of debit in the electronic credit ledger when the balance in the electronic credit ledger falls below the amount of input tax credit wrongly availed, in all other cases.]
What changed, and when
The amendment trail, newest first — because the version that applies to your case depends on the period.
2024-11-01 · Inserted
20/2024-CTdated08
Inserted (w.e.f. 01.11.2024) ) vide Notification No. 20/2024-CT dated 08.10.2024.
2017-07-01 · Inserted
14/2022-CTdated
Inserted vide Notification No. 14/2022-CT dated. 05.07.2022 w.e.f. 01.07.2017.
date not stated · Inserted
12/2024-CTdated
Inserted vide Notification No. 12/2024-CT dated. 10.07.2024.
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Text reproduced from the Central Board of Indirect Taxes and Customs, as available on 2026-09-05. The explanation and practice notes above are GSTZone’s own, written for this hub. If you spot anything out of date, tell us and we’ll fix it — this hub is checked daily against CBIC.
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