Updated: 15 September 2026

Section 50 of CGST Act - Interest on Delayed Payment of Tax

Section 50 of the Central Goods and Services Tax Act, 2017 governs interest payable when GST is paid late and when input tax credit (ITC) is wrongly availed and utilised. The present law is materially different from the original 2017 text.

Key position: Interest under Section 50(1) is ordinarily linked to the tax remaining unpaid and, for delayed returns covered by the proviso, to the portion paid through the electronic cash ledger. Section 50(3) applies where ITC is both wrongly availed and utilised. The notified rate under Section 50(1), and the rate applicable under the amended Section 50(3), is 18% per annum, subject to the governing notification and rules.

Current law under Section 50

Section 50(1) - delayed payment of tax

Every person liable to pay tax under the CGST Act or the rules who fails to pay the tax, or any part of it, within the prescribed period must pay interest for the period during which the tax remains unpaid, at the rate notified by the Government on the recommendations of the GST Council, subject to the statutory ceiling of 18%.

The proviso deals with tax on supplies declared in a return under Section 39 after the due date. Except where the return is furnished after commencement of proceedings under Section 73, Section 74 or Section 74A for that tax period, interest is payable on the portion of tax paid by debiting the electronic cash ledger.

Section 50(2) - period for calculation

Interest under Section 50(1) is calculated in the prescribed manner from the day immediately following the day on which the tax became due.

Section 50(3) - wrongly availed and utilised ITC

Where input tax credit has been wrongly availed and utilised, the registered person must pay interest on that wrongly availed and utilised credit. The statutory ceiling is 24%, but the applicable rate was reduced to 18% with retrospective effect from 1 July 2017. The manner of calculation is prescribed in Rule 88B.

Interest rates under Section 50

Provision	Situation	Applicable rate
Section 50(1)	Delayed payment of tax	18% per annum
Section 50(3)	ITC wrongly availed and utilised	18% per annum, retrospectively from 1 July 2017

The rate is governed by Notification No. 13/2017-Central Tax dated 28 June 2017, as affected by the Finance Act, 2022.

Rule 88B - manner of calculating interest

Rule 88B of the CGST Rules, 2017 prescribes how interest under Section 50 is computed.

Delayed return covered by the proviso to Section 50(1)

Where supplies for a tax period are declared in a return filed after the due date, and the case falls within the proviso to Section 50(1), interest is calculated on the portion of tax paid by debiting the electronic cash ledger for the period of delay.

Other delayed-tax cases

In other cases under Section 50(1), interest is calculated on the amount of tax that remains unpaid, from the date the tax was due until the date it is paid.

Wrongly availed and utilised ITC

For Section 50(3), Rule 88B links interest to the amount of ITC that was both wrongly availed and utilised. Broadly, utilisation is determined by reference to the balance in the electronic credit ledger, and interest runs from the prescribed date of utilisation until reversal of the credit or payment of tax in respect of that amount.

Amount already available in electronic cash ledger

Rule 88B was amended with effect from 10 July 2024 to reduce interest exposure in specified delayed GSTR-3B cases. An amount available in the electronic cash ledger on the due date of the return, and subsequently debited while filing that return, is excluded from the amount on which interest is calculated under the relevant Rule 88B computation.

Practical point: Section 50 interest should not be computed merely by applying 18% to the gross tax figure in every delayed-return case. The nature of the liability, the return-filing facts, the electronic cash ledger balance and, for ITC cases, actual utilisation must be examined under Section 50 read with Rule 88B.

Important amendments to Section 50

Net cash liability: The proviso to Section 50(1) was given retrospective effect from 1 July 2017 through the Finance Act, 2021. This settled the legislative position that, for cases covered by the proviso, interest is levied on the cash component rather than the gross tax liability.

Wrong ITC: The Finance Act, 2022 substituted Section 50(3) retrospectively from 1 July 2017 so that interest applies when ITC is wrongly availed and utilised. The interest rate for this category was correspondingly made 18% retrospectively from 1 July 2017.

Section 74A: With effect from 1 November 2024, the proviso to Section 50(1) also refers to proceedings under Section 74A, in addition to Sections 73 and 74.

Related CGST Act provisions

Section 50 forms part of Chapter X - Payment of Tax. Readers may also refer to Section 49 - Payment of tax, interest, penalty and other amounts, Section 51 - Tax deduction at source, Section 52 - Collection of tax at source and Section 53 - Transfer of input tax credit.

Disclaimer: This article is for general legal and tax information. Statutory provisions, notifications, rules and facts of the particular tax period should be verified before acting on the information.