Advisory on Interest Computation and System Enhancements in FORM GSTR-3B

Effective from Tax Period January 2026 onwards

System-Computed Interest in Table 5.1 of FORM GSTR-3B

With effect from the tax period January 2026 onwards, the GST Portal has been enhanced to compute interest in Table 5.1 of FORM GSTR-3B in accordance with the proviso to Rule 88B(1) of the Central Goods and Services Tax Rules, 2017. Interest shall be calculated only on that portion of the net tax liability which remains unpaid, after adjusting the minimum cash balance available in the Electronic Cash Ledger from the due date of return filing till the date of tax payment (offset). The interest so computed shall be system-generated and auto-populated and shall represent the minimum interest payable under law. The taxpayer shall not be permitted to reduce the auto-populated amount; however, the amount may be modified upwards, where required, based on the taxpayer’s own records.

Interest Computation Formula

Interest = (Net Tax Liability – Minimum Cash Balance in ECL from due date to date of debit) × (No. of days delayed / 365) × Applicable Interest Rate

Illustrative Example – Interest Computation

Accordingly, an amount of Rs. 532 shall be auto-populated in Table 5.1 of FORM GSTR-3B and shall be mandatorily payable.

2. Auto-Population of Tax Liability Break-up Table in FORM GSTR-3B

With effect from the tax period January 2026 onwards, the GST Portal shall auto-populate the Tax Liability Break-up Table in FORM GSTR-3B based on the date of invoices or documents reported in FORM GSTR-1, FORM GSTR-1A or the Invoice Furnishing Facility (IFF), including documents pertaining to previous tax periods, where the corresponding tax liability is discharged in the current return. This enhancement ensures accurate period-wise reporting of tax liability and alignment of interest computation with the proviso to Section 50 of the CGST Act, 2017.

3. Update in Table 6.1 – Suggestive Cross-Utilisation of Input Tax Credit

With effect from the tax period January 2026 onwards, the common portal has been enhanced in Table 6.1 of FORM GSTR-3B to facilitate optimal utilisation of Input Tax Credit. Upon complete exhaustion of available IGST input tax credit, the portal permits discharge of IGST liability through utilisation of available CGST and SGST input tax credit, in any order or sequence, as may be selected by the registered person.

This functionality is system-enabled and suggestive in nature. While the GST Portal permits such utilisation, the statutory provisions of GST law do not presently permit utilisation of ITC in sugested manner. Registered persons are advised to ensure compliance with the CGST Act, 2017 and rules made thereunder, notwithstanding the portal-enabled flexibility.

4. Collection of Interest in FORM GSTR-10 for Delayed Filing of Last Applicable FORM GSTR-3B

In cases where the last applicable FORM GSTR-3B remains unfiled or is filed belatedly, the interest payable on delayed payment of tax shall be computed and collected through FORM GSTR-10 (Final Return), wherever applicable. Registered persons are advised to ensure timely filing of the last applicable return to avoid accrual and recovery of interest through the final return mechanism.

Advisory Link

This advisory has been prepared solely for educational purposes. It is not a legal advice hence, taxpayer must rely on statutory provisions for compliance requirements. For any official or legal purpose, please refer to the applicable GST laws, rules, and notifications.

Disclaimer – This advisory has been prepared solely for educational purposes. It is not a legal advice hence, taxpayer must rely on statutory provisions for compliance requirements. For any official or legal purpose, please refer to the applicable GST laws, rules, and notifications.