How do I calculate the interest on GST liability
The interest on GST liability is calculated at a specific rate on the amount of tax liability that is overdue or unpaid for a particular period. The interest rate is currently set at 18% per annum and is calculated on a monthly basis. To calculate the interest on GST liability is crucial.
To visit: https://www.gst.gov.in/
Calculating the interest on GST liability, you can use the following formula:
Interest Payable = (Outstanding Tax Liability x 18% x Number of Days) / 365
Here, “Outstanding Tax Liability” refers to the amount of GST that is unpaid or overdue, “18%” refers to the annual interest rate of 18%, “Number of Days” refers to the duration of the overdue payment in days.
For example, if you have a GST liability of Rs. 10,000 that is overdue by 30 days, the interest payable would be:
Interest Payable = (10,000 x 18% x 30) / 365 = Rs. 147.95
So, in this case, you would need to pay the outstanding tax liability of Rs. 10,000 along with the interest of Rs. 147.95.
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