GSTN releases a new functionality of interest calculator in GSTR-3B

The Goods and Service Tax Networks (GSTN) has released a new functionality of interest calculator in GSTR-3B on the GST Poral.

This functionality will facilitate & assist the taxpayers in doing self-assessment. This functionality will arrive at the system computed interest on the basis of the tax liability values declared by the taxpayers, along with the details about the period to which it pertains. The interest applicable, if any, will be computed after the filing of the said GSTR-3B and will be auto-populated in the Table-5.1 of the GSTR-3B of the next tax-period. The facility would be similar to the collection of Late fees for GSTR-3B, filed after the Due date, posted in the next period’s GSTR-3B. This functionality will inform the taxpayers about the manner of system computed interest for each tax-head and hence will assist the taxpayers in doing correct computation of interest for the tax liability of any past period declared in the GSTR-3B for the current tax period.

Introducing Interest calculator
To facilitate taxpayers in doing self-assessment, the new functionality of interest calculator is being released in GSTR-3B. This functionality will assist taxpayers in calculating the interest applicable for delayed filing of returns. Taxpayers will have to verify and discharge the correct interest liability as per law, as payment of interest is a statutory compliance.

Interest computation
The interest computed by the system has been aligned with the Section-50 of the CGST Act, 2017, as amended. Consequently, interest liability for respect of supplies made during the tax-period pertaining to the GSTR-3B being filed will be calculated only on that portion of the tax which is paid by debiting the electronic cash ledger, i.e., net tax paid in cash. However, with respect to the supplies pertaining to the previous taxperiod(s) being declared in later GSTR-3B, the interest will be computed for the entire liability.

Auto-population of system computed interest
Furnishing tax-period wise break-up in GSTR-3B: The return in FORM GSTR-3B allows taxpayers to discharge tax liability for previous tax-periods also, in addition to the tax liability for the present period. However, the tax-period wise break-up of the tax liability is not available in GSTR-3B.
This new functionality will compute the interest applicable on the basis of the values declared by the taxpayers in GSTR-3B for a particular tax-period assuming that entire liability belongs to that tax period. This system computed interest will be auto-populated in Table-5.1 of GSTR-3B for the next tax-period, the way it is done for the Late fees at present.
The system computed interest values auto-populated in next GSTR-3B return will be kept editable. However, the system generated PDF of filed GSTR-3B will contain both values: the System computed interest, and the user paid interest values.

To enable taxpayers to pay interest on supplies of past periods declared in a GSTR-3B, if any, a new button has been added in GSTR-3B, called Tax Liability Breakup, as applicable, and data is to be entered by clicking this button only by those taxpayers who are making payment for liability pertaining to earlier tax-periods in the present GSTR-3B. In cases where the present GSTR-3B consists of liability only for the present period, the taxpayers can ignore this button, and continue filing their return as usual.

Changes in user experience
After the interest calculator is enabled on the GST Portal, there will be no change in the user experience for the taxpayers. For those who have filed the previous return after due date, the interest would be auto-calculated and populated assuming that the entire liability pertained to that tax period. The taxpayer would still have the facility to provide the break-up of liability of the past period(s) to pay the correct interest using the Tax Liability Breakup, as applicable button. For details of declaring tax-period wise tax liability, please refer to the Annexure.
This facilitation measure is expected to assist the taxpayers by helping them with calculation of correct interest while filing of GSTR-3B and will thus improve ease in filing return under GST and is, therefore, in the direction of further reducing the compliance burden for taxpayers.

Illustrative example

1. To explain the new functionality, an illustrative example has been provided, showing sample data for a taxpayer, and how the details have to be entered in a GSTR-3B, and how the interest for the same will be computed & appear in the subsequent GSTR-3B.

Illustration :

1. 1. • A monthly taxpayer is filing GSTR-3B for the tax period of October 2021. In the said GSTR-3B, the taxpayer has declared the following values in Table-3.1 of GSTR-3B:

However, these consolidated tax liability values consist of not only for October 2021 but also for previous tax-periods of July, August & September 2021.

1. 1. • Hence, for the purpose of interest calculation, the taxpayer would be expected to declare the following tax-period wise break-up in GSTR-3B for October 2021, in the following manner :

1. • The interest calculation could be thereafter done by the system as per the aforesaid values declared by the taxpayer. However, this gap exists in the current GSTR-3B implementation, to cover which new feature has been added.

New feature in GSTR-3B

2. Tax Liability Breakup, As Applicable button in GSTR-3B: A new button called Tax Liability Breakup, As Applicable will be provided in GSTR-3B for furnishing the tax-period wise break-up of tax liability. This button will appear in GSTR-3B on the payment page, below the Table 6.1 Payment of tax

The Tax Liability Breakup, As Applicable button will be enabled only after clicking the Make payment/Post credit to ledger button. In other words, break-up of the tax-period wise values can be furnished by the taxpayers after making payment of the liability for this period.

This button will also appear on the filing page of GSTR-3B.

3. If the taxpayers click on this button, they will be provided with an option of declaring tax- period wise break-up of the tax liability discharged by them in this GSTR-3B. The values could be declared head-wise, and the total value for all the tax-periods put together should be equal to the tax liability paid in the GSTR-3B.

4. On clicking the Save button, the option to File GSTR-3B through EVC or DSC will be enabled.

Auto-population of system computed interest in next GSTR-3B

5 System computation of interest :After filing this GSTR-3B, the system will compute the interest liability on the basis of the values declared in this GSTR-3B. This computation will be done in accordance with the provisions of the Section-50 of the Act, as amended.

Interest will be computed for each tax-period as per the following formula :

Depending on the number of tax-periods declared by the taxpayer in the tax-period wise break-up, the interest liability for each tax-period will be calculated separately as per this formula. The interest values for different periods will then be added, and the total interest liability will be computed for each head by the system.

6. Auto-population of interest : The interest values computed above will be auto- populated in the Table 5.1 – Interest and Late fee for previous tax period of GSTR-3B of the next tax-period. The break-up and the manner of interest computation can be viewed by clicking the System Generated GSTR-3B button on this page.

This is on the lines of the auto-population of Late fees for the previous tax-period in the subsequent tax-period. Just like the system-computed late fees is auto-populated in the next tax-period, now the system-computed interest will also be populated in the GSTR-3B of the next tax-period. The system computed values will also be displayed to the user on mouse- hovering.

7. To begin with, system will not stop the users from changing the system computed interest values. However, the system will warn the taxpayers on downward editing of the interest values in any tax head. On downward editing of values, the concerned cell will become Red and the system computed values will also be shown during mouse hovering to caution the taxpayer from making a mistake.

8. If the taxpayer attempts to file GSTR-3B with the downward edited values, the interest tile would become Red and also the system will provide a Warning regarding the same to the user. However, despite these warnings, the system will not stop the taxpayers from filing their GSTR-3B with changed values.

9. Depending on the number of tax-periods declared by the taxpayer in the tax-period wise break-up, the interest liability for each tax-period will be calculated separately as per this formula. The interest values for different periods will then be added, and the total interest liability will be computed for each head by the system.

Changes in user experience

10. Even after the interest calculator is enabled on the GST Portal, there will be no change in the user experience for the taxpayers who have not made any delayed payment of tax liability pertaining to earlier period(s).

The taxpayer having tax liability pertaining to earlier tax period(s) can use the facility to provide the break-up of liability of the past period(s).If the previous period tax liability is not declared, the interest will by default be computed by assuming that the entire tax liability pertains to the present period.

For details of declaring tax-period wise tax liability, please refer to paras. 2-4 above.