The Goods and Services Tax (GST) framework has undergone significant strengthening in recent years with focused reforms aimed at improving compliance, transparency and taxpayer facilitation. Reflecting these developments, the Institute of Chartered Accountants of India (ICAI) has released the revised edition of the “Handbook on Interest, Late Fee and Penalties under GST” for December 2025, incorporating the latest statutory amendments, notifications and clarifications.
Key Highlights
- Updated legal provisions on interest under Section 50
The Handbook provides detailed guidance on:
- Interest on delayed payment of tax, clarified through amendments and the retrospective application of the proviso to Section 50(1) (from 01.07.2017), ensuring interest is charged only on net cash liability except in cases involving proceedings under Sections 73/74/74A.
- Interest on wrongly availed and utilised ITC, now uniformly payable at 18%, following retrospective amendments and insertion of Rule 88B, which prescribes method of calculation.
- Extensive illustrations, judicial references (Madras HC, Telangana HC), and GST Council decisions have been incorporated to enhance clarity.
- Consolidated clarity on Late Fee & Penalties
The publication compiles updated provisions and system-based enforcement mechanisms under:
- Section 73 and 74 (demand & recovery),
- Section 128A (waiver of interest/penalty for FY 2017–2020 in eligible cases),
- Rule 37 reversals for non-payment to suppliers within 180 days,
- Penal consequences for excess ISD credit distribution, mismatch in TCS/TDS filings, and delays in refund processing.
- Updates related to TDS & TCS compliance
The Handbook elaborates on:
- Interest on delayed deposit of TDS/TCS under Sections 51 & 52,
- Conditions for rectification of TCS statements,
- Matching mechanisms under Rule 78,
with simplified examples for government entities, PSUs and e-commerce operators.
- Special clarifications on refunds and IGST on imports
- Refund-related interest under Section 54(12) & Section 56 (6%/9%) explained with timelines.
- IGST interest/penalty applicability on imports updated as per Finance (No.2) Act, 2024, clarifying that such levies apply prospectively from 16 August 2024.
- Relief Measures During Pandemic Period (2020)
The document reproduces all COVID-19-related interest and late-fee relaxations issued via notifications and circulars, including reduced interest slabs and extended return deadlines for taxpayers of different turnover brackets.
ICAI Leadership Remarks
In the Foreword, ICAI President notes that GST has matured due to structural reforms and digital initiatives, and commended the Committee for bringing out an updated, technically robust publication useful for taxpayers and professionals.
The Preface emphasises the increasing role of technology–driven scrutiny and automation in compliance processes, highlighting the importance of clear understanding of interest, late fee and penalty provisions in the evolving GST regime.
About the Publication
The updated Handbook reflects the law as amended up to 5th December 2025 and aims to serve as a reliable technical reference for businesses, tax officers, consultants and chartered accountants. It compiles statutory provisions, rules, notifications, circulars, judicial precedents and practical examples in a single source.
The Handbook can be accessed at: https://a2ztaxcorp.net/wp-content/uploads/2025/12/Handbook-on-Interest-Late-Fee-and-Penalties-under-GST.pdf
