The GST Network (GSTN) has issued an advisory dated 30 January 2026 introducing important system-level enhancements in GSTR-3B aimed at improving the accuracy of interest computation, tax liability allocation, ITC utilisation, and recovery of statutory dues.
These changes are applicable from the January 2026 return period onwards and bring the GST portal’s functionality closer to the statutory intent of the CGST Act, 2017 and CGST Rules, 2017, particularly Section 50 and Rule 88B.
1. Revised Interest Computation Mechanism in GSTR-3B
What has changed?
From January 2026 onwards, interest on delayed payment of tax will be system-computed more accurately by considering the minimum balance available in the Electronic Cash Ledger (ECL) during the delay period.
This enhancement aligns the portal with the proviso to Rule 88B(1) of the CGST Rules, 2017, which provides that interest is payable only on the portion of tax paid through cash, not on tax discharged via ITC.
How the system now calculates interest
The GST portal will compute interest using the following logic:
Interest = (Net tax liability payable in cash – Minimum cash balance available in ECL during the delay period) × (Number of days of delay / 365) × Applicable interest rate
Key operational implications
- The interest amount will be auto-populated in Table 5.1 of GSTR-3B
- This auto-computed figure represents the minimum interest payable
- Taxpayers cannot reduce the auto-populated interest
- Taxpayers may increase the interest amount if self-assessment shows a higher liability
- Interest for delayed filing of January 2026 GSTR-3B will be auto-reflected in the February 2026 GSTR-3B
📌 Why this matters: Earlier, interest computation often ignored idle cash already lying in the ledger, leading to disputes and excess payment. This change ensures fair, rule-based interest recovery.
2. Auto-Population of Tax Liability Break-Up for Past-Period Supplies
What has been introduced?
The GST portal will now auto-populate the “Tax Liability Break-Up” table in GSTR-3B for cases where:
- Supplies pertaining to earlier tax periods are reported late in:
- GSTR-1
- GSTR-1A
- Invoice Furnishing Facility (IFF)
- Tax on such supplies is paid in the current GSTR-3B
Purpose of this change
This enhancement helps the system:
- Identify period-wise tax liability
- Compute interest accurately
- Reduce disputes arising from mismatch between reporting period and payment period
Important clarifications
- Auto-populated values are system-generated suggestions
- Taxpayers retain the right to revise figures upward
- The system will not permit downward modification if it impacts interest computation
📍 Portal path: GSTR-3B → Table 6.1 → Tax Liability Break-Up
3. Greater Flexibility in ITC Utilisation (Table 6.1)
What’s new?
From January 2026:
- After full utilisation of IGST ITC, taxpayers can use:
- CGST ITC and SGST ITC in any order for payment of IGST liability
Why this matters
This resolves long-standing operational rigidity in the portal and:
- Improves cash flow management
- Reduces manual workarounds
- Aligns portal functionality with Section 49 of the CGST Act
4. Interest Recovery through GSTR-10 (Final Return)
Applicability
For cancelled GST registrations, where:
- The last applicable GSTR-3B is filed after the due date
New mechanism
- Interest on delayed filing will now be:
- Calculated
- Demanded
- Recovered through GSTR-10 (Final Return)
Significance
This ensures that:
- Interest liability does not lapse due to cancellation
- Government dues are fully recovered before closure
- Compliance gaps post-cancellation are plugged
5. Regulatory Intent and Compliance Impact
These enhancements collectively aim to:
- Align the GST portal with Section 50 (Interest) of the CGST Act
- Operationalise Rule 88B in a transparent, system-driven manner
- Reduce litigation arising from manual interest calculation
- Encourage timely filing and accurate self-assessment
- Strengthen trust-based compliance while safeguarding revenue
Key Takeaways for Taxpayers and Professionals
- Interest computation is now more precise and less discretionary
- Cash ledger balances matter—idle cash reduces interest burden
- System-computed interest is a floor, not a ceiling
- Delayed compliance will still attract consequences, even after registration cancellation
Businesses should closely monitor auto-populated tables before filing
Source: GSTN Advisory on Interest Collection and Related Enhancements in GSTR-3B dated 30/01/2026