From now on, the interest payable on delayed payment of GST will be calculated on net tax liability. The Central Board of Indirect Taxes and Customs (CBIC) announced that laws are being amended to bring the rule into effect.

Except for businesses under the composition scheme, every GST registered enterprise should file GSTR-1 showing tax liability by 11th of the following month and pay taxes by filing GSTR-3B by 20th. The interest on tax liability needs to be paid either through cash or using the input tax credit.

Several taxpayers have paid taxes after the due date but didn't pay the interest due on delayed payment. The CBIC recently issued a directive to begin the recovery of Rs. 46,000 crores of unpaid interest on delayed GST payment.

Current GST law permits interest calculation on delayed GST payment based on gross tax liability. But the central government and various state governments amended their respective CGST/SGST Acts to charge interest on delayed payment of GST based on net tax liability. This amendment was made based on the recommendations of the GST Council.

Telangana and West Bengal have already started amending their state GST acts. Once the amendment process is done, the changed provisions can be implemented throughout the country.