Whether you are an entrepreneur, a startup founder, or the owner of a small or medium business, following GST regulations is important. It helps you to avoid penalties and maintain the smooth operations of your business organization.
Also, if you miss the GST return filing deadline, it can lead to some serious implications. In this blog post, we’ll explain what happens when you miss the GST filing due date, the penalties involved, and how to protect your business from compliance issues.
Why is Timely GST Filing Important?
Under the Goods and Services Tax (GST) system in India, registered businesses must file monthly, quarterly, or annual returns based on their turnover and category. These returns include information about outbound and inbound supply, tax collected and paid out, input tax credit claimed, and additional information.
Here are the benefits of timely filing:
- Ensures an ongoing input tax credit (ITC).
- Helps maintain a good track record with GST rules.
- Eliminates penalty and interest liabilities.
- Keeps your business qualified for government contracts, loans, and subsidies.
What are the Negative Effects of Missing the GST Filing Deadlines?
Missing the GST filing deadline causes more than just paperwork delays; it can also result in financial and operational difficulties. Let’s go over the major implications that you should be informed of.
- Late Fees:
According to GST rules, if you postpone your GSTR-3B and GSTR-1 returns, you are charged a late fee of:
- ₹50 per day (₹25 for CGST and SGST) is applicable for businesses that have tax liability
- ₹20 per day (₹10 for CGST and SGST) is applicable for nil returns
The cost increases until it reaches the limit of ₹5,000 for every return. For example, if you’re 30 days late in filing GSTR-3B, you may owe ₹1,500 in late fees alone. This is for a normal return with tax liability.
- Interest on Tax Due:
Interest is applicable on delayed GST payments based on the net tax payable after adjusting the input tax credit.
Every taxpayer is responsible for paying the interest if they:
- Make a delayed payment of CGST, SGST, or IGST beyond the due date.
- Claim surplus input tax credit.
- Reduce the surplus output tax liability.
If GST is not paid by the due date of filing the return, interest at the following rates must be paid.
| Particulars | Annual Interest |
| Tax paid after due date* | 18% |
| Excess Input Tax Credit claimed or excess reduction in Output Tax liability | 24% |
For example, suppose a taxpayer fails to pay ₹10,000 in taxes for January month of 2025, while the due date is February 20, 2025.
If they pay on March 22, 2025, the interest for the period of delay (30 days, from February 21 to March 22) will be calculated as follows:
Interest = (Outstanding Tax x Interest Rate x Days) / 365
Interest = (10,000 x 18% x 30) / 365 = ₹147.95.
- Blocking of E-Way bills:
Failing to file returns for two consecutive tax periods may prevent you from generating e-way bills, which are required for delivering items valued over ₹50,000.
This can seriously affect your operations and logistics, especially if you are into interstate commerce.
- Restrictions on Input Tax Credit:
If your supplier fails to register their GSTR-1, or you fail to file your GSTR-3B, you may be unable to receive the input tax credit (ITC). This raises your out-of-pocket tax liability and reduces working capital.
- GST Registration Cancellation:
Repeated failure to file GST returns may result in the GST department canceling your GST registration on its own initiative. This means you can’t legally collect GST or claim ITC, which can disrupt your business.
According to GSTN data provided on CAclubindia, Gujarat leads India with a 95% monthly submission rate of GSTR-3B returns by end-May 2024, followed by Uttar Pradesh, Tamil Nadu, Himachal Pradesh, and Punjab, all above 90% compliance.
Are you Facing Financial Difficulties?
Are you not able to file GST returns due to cash flow problems? Then Indifi is here to help you. Indifi provides collateral-free business loans, especially for GST-registered firms. Indifi makes it easy to access finance, whether for short-term working capital or settling tax dues.
Here are the unique USPs of Indifi:
- Quick loan payout within 48-72 hours.
- Minimal paperwork required.
- Customised solutions for entrepreneurs, startup founders, or small business owners.
- Flexible repayment options.
- Affordable financing rates for businesses.
Conclusion
Missing a GST return deadline shouldn’t be taken lightly; it can have significant financial, operational, and brand-related consequences. Failure to comply with the GST rules is costly in terms of penalties and loss to business.
With the right tools and financial support from Indifi, you can overcome challenges and scale your business smoothly.
FAQs
- Within how many days after the due date can I submit my GST return?
You may file it at any time after the due date, but late penalties and interest will apply from the initial due date to the actual filing date.
- Does the late submission of GST returns affect my business loan eligibility?
Yes, financial institutions frequently consider whether you are following GST rules while considering loan applications, particularly for unsecured business loans. Repeated GST delays can hurt your credit rating, making it harder to get loans from banks or NBFCs.
- Will delayed GST filing affect relationships with suppliers or contracts?
Yes, delayed GST registrations could block your suppliers’ ITC, resulting in payment delays or unsatisfactory relationships. Some suppliers may even cancel contracts because of failure to comply with GST rules.