The way the GST portal calculates interest on late GSTR-3B payments changed in 2026. The interest rate is still 18%, but from the January 2026 tax period the portal reduces the interest base by money that was already sitting in your Electronic Cash Ledger (ECL). This guide explains what changed, the formula, and what it means for late filers.
The rules that did not change
- Rate: interest on late payment of GST is 18% a year under Section 50(1) of the CGST Act.
- Only on cash: interest is charged only on the part of the tax paid in cash (from the ECL), not on tax set off with input tax credit (Rule 88B).
- Wrongly availed ITC: interest under Section 50(3) applies only when wrongly availed ITC is also utilised. The rate is 18%; it was cut from 24% in July 2022, with effect from 1 July 2017.
- Notices: amounts demanded in proceedings under Sections 73 or 74 do not get the net-cash benefit.
What changed in 2026
A proviso added to Rule 88B(1) in July 2024 says that if cash was already in your ECL from the due date until you paid, that amount should not attract interest, because the government already had the money. Until 2025 the portal did not fully apply this, so taxpayers often paid interest on cash that was already deposited.
GSTN Advisories 647 and 649 (January 2026) changed the system computation in Table 5.1 of GSTR-3B, for returns from the January 2026 tax period (filed from February 2026):
Interest base = net tax payable in cash − the lowest ECL balance between the due date and the date of filing
The interest is then 18% a year on that base for the days of delay.
Example
A monthly filer’s GSTR-3B for March 2026 was due on 20 April 2026 and was filed on 30 April 2026, ten days late. Net tax payable in cash was ₹2,00,000.
- The ECL balance was ₹1,20,000 on 20 April and stayed at or above that until 30 April, when the remaining ₹80,000 was deposited.
- Lowest balance in the period: ₹1,20,000.
- Interest base: ₹2,00,000 − ₹1,20,000 = ₹80,000.
- Interest: ₹80,000 × 18% × 10 ÷ 365 = ₹395.
Under the old computation, interest was worked out on the full ₹2,00,000: ₹2,00,000 × 18% × 10 ÷ 365 = ₹986.
What this means in practice
- Deposit cash early. If you know the return will be late, depositing tax into the ECL by the due date stops interest on that amount, even if you file later.
- The lowest balance counts. Using ECL cash for something else during the delay period (for example, another return) lowers the minimum balance and increases interest.
- Earlier periods are not reworked. Tribunal decisions have held that the ECL exclusion applies from the date the proviso took effect (July 2024) and not retrospectively. For periods before January 2026, check the portal’s computation against your own.
- Self-check. The system figure in Table 5.1 can be edited upwards but should not be reduced without reason. Work out your own number with the GST interest calculator before filing.
Late fee is separate
Interest is in addition to the late fee for a late GSTR-3B: ₹50 a day (₹20 a day for nil returns), subject to the caps. Use the late fee calculator for that part.