Updated 4 November 2026. A plain-language explainer for business owners, not legal or tax advice. Read the GSTN advisory on the GST portal news page and confirm with your CA.
Short answer: since the January 2026 tax period, the GST portal calculates interest on late GSTR-3B payments itself and auto-fills it in Table 5.1 of the next return. You can increase that figure but not reduce it. Interest at 18% a year is charged only on the part of the tax paid in cash, and under Rule 88B any amount already sitting in your electronic cash ledger from the due date until the payment date is left out of the calculation.
What changed in 2026
According to Taxmann and ClearTax, GSTN issued an advisory on 30 January 2026 with these changes:
- System-computed interest: if a GSTR-3B is filed late, the portal works out the interest and auto-fills it in Table 5.1 of the following month's return.
- Minimum, not suggestion: the auto-filled interest cannot be lowered. You can raise it if your own working shows more is due.
- Tax liability breakup: when you pay tax in the current return for supplies of earlier periods, the portal fills a breakup table using the document dates in GSTR-1, GSTR-1A or IFF. These values can be increased.
- ITC set-off order: once IGST credit is used up, CGST and SGST credit can be used to pay the remaining IGST liability in any order.
- Cancelled registrations: interest on a late final GSTR-3B is collected through GSTR-10.
ClearTax also reports a later advisory (16 March 2026) that extended the "Tax Liability Breakup, As Applicable" tab to returns from February 2026 onward, and a "Re-compute interest" button for some February 2026 cases where the figure in the March return was wrong. Taxscan covered the January change as well.
How the interest is worked out
Section 50 of the CGST Act charges interest on tax paid late. Rule 88B limits it to the cash portion, because tax paid through input tax credit that was already available does not attract interest. The working is roughly:
Interest = (tax paid in cash late minus the lowest cash ledger balance between the due date and the payment date) x 18% x days of delay / 365
Worked example
Say your October 2026 GSTR-3B shows ₹2,00,000 payable in cash, due on 20 November. You file and pay on 30 November, which is 10 days late. Your electronic cash ledger never dropped below ₹50,000 between 20 and 30 November.
- Amount that attracts interest: ₹2,00,000 minus ₹50,000 = ₹1,50,000
- Interest: ₹1,50,000 x 18% x 10 / 365 = about ₹740
If you had deposited the full ₹2,00,000 in the cash ledger by 20 November and only filed the return late, interest on that cash portion would be nil under the proviso to Rule 88B. A late fee for the late return can still apply.
Reading the new GSTR-3B screens
When you open GSTR-3B after a late month, look at three places before you pay:
- Table 5.1 (interest and late fee): the interest figure filled in by the portal for the earlier late return. Treat it as the floor.
- Tax liability breakup: a table that splits the tax you are paying now by the period it actually belongs to, based on the invoice dates in GSTR-1, GSTR-1A or IFF. If an old invoice was reported late, its tax is shown against its original month, and that is what drives interest.
- Cash ledger history: your electronic cash ledger statement for the days between the due date and the payment date. The lowest balance in that window is the amount the Rule 88B benefit is based on.
If the portal figure looks higher than your own working, the usual causes are a wrong document date in GSTR-1, a cash ledger balance that was used for another payment in between, or a delayed challan. Check those before you raise the matter with your CA or the GST helpdesk.
Interest vs late fee: not the same thing
Interest is charged on tax paid late. A late fee is charged for filing the return late, even when no tax is due. Depositing cash on time can bring interest to nil, but it does not remove the late fee for a return filed after the due date. Both show up in Table 5.1, so read the two columns separately.
Five ways to keep interest low
- Deposit cash before the due date (PMT-06), even if the return itself is not ready. The ledger balance protects you from interest.
- Do not withdraw or use that balance for other liabilities in between. The lowest balance in the window is what counts.
- Check Table 5.1 every month. Compare the portal's figure with your own working and keep a note of the difference.
- Report earlier-period sales correctly. The liability breakup uses GSTR-1 document dates, so a wrong date in GSTR-1 shows up as interest later.
- Reconcile before filing. Matching purchases with GSTR-2B and sales with GSTR-1 avoids last-minute delays that cause interest in the first place.
What this means for your accounting software
If your billing or ERP system prepares GSTR-3B data, it should now show expected interest before you file, track the cash ledger balance from the due date, and tag each sales document with the right period. Our GST billing software checklist covers the basics, and the GST changes from 1 November 2026 post covers the latest rule changes. For a ready list of this month's dates, see the November 2026 compliance calendar.
How we can help
Nextinera builds GST-ready ERP and inventory software that shows reconciliation gaps and estimated interest before the 20th. Book a free call to talk about your setup.