GST and TDS Late Fee & Interest, Side by Side
GST and TDS both charge a late fee for a delayed return and interest for delayed payment — similar shape, genuinely different mechanics. Applying one regime's logic to the other is a quick way to misstate an exposure figure.
GST: One Interest Meter, One Late-Fee Structure
Late fee (Section 47) for GSTR-3B/GSTR-1: ₹50 per day (₹25 CGST + ₹25 SGST) for non-nil returns, capped by prior-year turnover — ₹2,000 for turnover up to ₹1.5 crore, ₹5,000 between ₹1.5 crore and ₹5 crore, ₹10,000 above ₹5 crore. Nil returns get a lighter rate: ₹20 per day (₹10 + ₹10), capped at ₹500.
Interest (Section 50) runs at 18% per annum, but only on the tax portion actually paid through the electronic cash ledger — net of ITC set-off, not on the gross liability. This was clarified retrospectively by amendments to Section 50(1): interest is not charged on the ITC-covered portion of the liability, only on whatever had to be settled in cash.
TDS: Two Separate Interest Meters, Plus a Return Late Fee
TDS splits into three genuinely independent checks:
Interest for late deduction (Section 201(1A), first limb) — 1% per month or part of a month, running from the date tax was deductible to the date it was actually deducted.
Interest for late deposit (Section 201(1A), second limb) — 1.5% per month or part of a month, running from the date deducted to the date actually deposited.
Late fee for the TDS return (Section 234E) — ₹200 per day of delay, capped at the TDS amount itself.
The "Month or Part" Trap
TDS interest doesn't run per day the way GST interest does — it runs per calendar month or part of a calendar month touched, and that rounding is aggressive. A payment deducted on 30 April and deposited on 1 May — a two-day slip — touches two separate calendar months (April and May), so it's charged as two full months of interest at 1.5%, not two days' worth. The month-count is based on calendar-month boundaries crossed, not a 30-day block from the trigger date.
GST interest has no equivalent cliff — it's a straight daily-rate computation (18% p.a. ÷ 365 × days) on the cash-ledger tax, so a two-day delay costs two days of interest, nothing more.
Comparing the Two Regimes
| GST | TDS | |
|---|---|---|
| Late fee basis | Per day, capped by turnover (or ₹500 for nil) | Per day, capped at the TDS amount |
| Interest basis | 18% p.a., daily, on cash-ledger tax only | 1% p.m. (late deduction) + 1.5% p.m. (late deposit), month-or-part |
| Rounding | Smooth, day-by-day | Aggressive — any part of a month counts as a full month |
| What's exempt from interest | ITC-covered portion of liability | Nothing — full TDS amount is the interest base |
Frequently Asked Questions
Does GST interest apply to the full tax liability or just the cash-paid portion?
Just the cash-ledger portion — the amount actually settled in cash after ITC set-off, not the gross liability. This was clarified retrospectively; interest doesn't apply to the part of the liability covered by input tax credit.
Why can a 2-day TDS deposit delay cost two months of interest?
Because Section 201(1A) interest runs on "month or part of a month" touched, not elapsed days. If the deduction date and deposit date fall in two different calendar months — even by one day — both months count in full, at 1.5% each for late deposit.
Is the GST late fee for a nil return the same as for a regular return?
No. A nil GSTR-3B/GSTR-1 gets a lighter rate — ₹20/day (₹10 CGST + ₹10 SGST), capped at ₹500 — compared to ₹50/day for a non-nil return, with turnover-based caps up to ₹10,000.
Is the Section 234E TDS return late fee capped?
Yes — at the TDS amount itself. Unlike GST's fixed rupee caps, the 234E cap scales with the TDS deducted: the late fee cannot exceed the tax that was actually required to be deducted.
CORAA's GST Late Fee Calculator and TDS Interest & Late Fee Calculator run each regime's actual mechanics — GST's daily cash-ledger interest and turnover-capped late fee, TDS's dual month-or-part interest meters plus the 234E return fee — rather than applying one regime's daily-rate logic to both.