📌 Background of the Advisory
The Goods and Services Tax Network (GSTN) has issued an advisory titled “Advisory on Interest Collection and Related Enhancements in GSTR-3B”, informing taxpayers about important changes implemented on the GST portal from January-2026 onwards.
These changes primarily aim to:
Align interest computation with statutory provisions
Improve accuracy in tax liability reporting
Reduce manual disputes related to interest calculation
Ensure proper recovery of interest in case of delayed compliance
🧮 1. Updated Interest Computation in GSTR-3B (Table 5.1)
🔹 What Has Changed?
From January-2026 tax period onwards, the GST portal now computes interest in Table 5.1 of GSTR-3B by giving benefit of the minimum cash balance available in the Electronic Cash Ledger (ECL) from:
Due date of return filing → Date of tax payment (offset)
This enhancement is strictly in line with the proviso to Rule 88B(1) of the CGST Rules, 2017, read with Section 50 of the CGST Act, 2017.
🔢 Revised 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
⚠️ Important Compliance Notes
Interest auto-populated in Table 5.1 is non-editable downward
Taxpayer cannot reduce the system-calculated interest
Auto-computed interest is minimum payable interest
Taxpayers must self-assess and increase interest manually, if required
This significantly reduces disputes on interest calculation while preserving taxpayer responsibility.
📊 2. Auto-Population of Tax Liability Break-Up Table in GSTR-3B
From January-2026 onwards, the Tax Liability Break-Up Table in GSTR-3B will be system-generated, based on:
Date of documents reported in GSTR-1 / GSTR-1A / IFF
Supplies pertaining to previous tax periods
Tax liability discharged in current GSTR-3B
This helps in clear segregation of:
Current-period supplies
Past-period supplies reported late but paid now
📍 Path on Portal:
Login → GSTR-3B Dashboard → Table 6.1 → Tax Liability Breakup
🔁 3. Update in Table 6.1 – Suggestive Cross-Utilisation of ITC
A major facilitation measure has been introduced regarding ITC utilisation.
🔹 New System Behaviour
Once IGST ITC is fully exhausted, the GST portal will allow:
Payment of IGST liability using CGST & SGST ITC
Any sequence of utilisation permitted by the system
This change enhances flexibility while remaining within the framework of Section 49 of the CGST Act.
📄 4. Interest Collection Through GSTR-10 (Final Return)
For cancelled registrations, a critical clarification has been issued:
If the last applicable GSTR-3B is filed after the due date,
interest on such delayed filing shall be levied and collected through GSTR-10 (Final Return).
This ensures that:
Interest does not escape recovery merely due to cancellation
Final compliance is completed before legal closure
⚖️ Legal Alignment & Statutory References
The advisory is aligned with:
Section 50, CGST Act, 2017 – Interest on delayed payment
Rule 88B, CGST Rules, 2017 – Manner of interest calculation
Section 49, CGST Act – Payment & ITC utilisation
Section 39 & 45, CGST Act – Return filing obligations
GSTR-3B & GSTR-10 statutory framework
🧭 Professional Insight – Practical Impact
“The revised interest logic finally brings the GST portal in line with Rule 88B, preventing unjust interest on funds already lying in the cash ledger. However, taxpayers must remain vigilant — the system computes minimum interest, not necessarily the correct interest.”
— Tech-Tax Solutions
🏁 Conclusion
The January-2026 enhancements represent a significant maturity step in GST compliance architecture. Automated interest computation, smarter liability break-up, flexible ITC utilisation, and structured recovery through GSTR-10 collectively reduce ambiguity while increasing compliance discipline.
Taxpayers should re-evaluate their delayed filing strategy, cash-ledger management, and self-assessment processes in light of these changes.
