Introduction

The GST Network (GSTN) has issued an important advisory introducing significant enhancements in GSTR-3B filing, applicable from the January 2026 tax period onwards. These changes primarily focus on interest computation, tax liability reporting, ITC utilization flexibility, and interest recovery in case of cancelled registrations.

The objective of this advisory is to align system-based computations with Section 50 of the CGST Act, 2017 and Rule 88B of the CGST Rules, while ensuring greater transparency and ease of compliance for taxpayers.

1. Revised Interest Calculation in GSTR-3B (Effective January 2026)

What Has Changed?

From the January 2026 tax period, the GST portal will auto-compute 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 till the actual date of tax payment (offset)

This enhancement follows the proviso to Rule 88B(1) of the CGST Rules, 2017.

Revised Interest Calculation Formula

Interest =
(Net Tax Liability – Minimum Cash Balance in ECL from due date to date of debit)
× (Number of days delayed / 365)
× Applicable Interest Rate

Key Compliance Points

• Interest will be auto-populated by the GST portal

• The auto-calculated interest is non-editable downward

• Taxpayers may increase the interest amount, if self-assessed liability is higher

• Auto-populated interest represents the minimum interest payable

? Important Note:
For delayed January 2026 GSTR-3B, interest will appear in the February 2026 GSTR-3B.

2. Auto-Population of Tax Liability Breakup Table in GSTR-3B

What is the Tax Liability Breakup Table?

This table captures tax liability pertaining to previous tax periods, which is reported and paid in the current GSTR-3B.

New System Enhancement

From January 2026 onwards, the GST portal will auto-populate the Tax Liability Breakup Table based on:

• Invoice / document dates

• Data reported in GSTR-1, GSTR-1A, or IFF

• Tax paid in the current GSTR-3B

? Navigation Path:

Login → GSTR-3B Dashboard → Table 6.1 → Tax Liability Breakup

Important Clarification

• Auto-populated values are suggestive

• Taxpayers may modify values upward, if required

• Final responsibility of correctness remains with the taxpayer

3. Flexible Cross-Utilization of ITC in Table 6.1

New ITC Utilization Facility

From January 2026:

• Once IGST ITC is fully exhausted

• The GST portal will allow payment of IGST liability using CGST and SGST ITC

• Utilization can be done in any sequence

This change improves system flexibility while remaining subject to Section 49 of the CGST Act.

4. Interest Collection through GSTR-10 for Cancelled Registrations

What’s New?

In cases where:

• GST registration is cancelled

• The last applicable GSTR-3B was filed after the due date

➡️ Interest on delayed filing will now be levied and collected through GSTR-10 (Final Return).

This ensures recovery of statutory interest even after cancellation of registration.

Overall Impact of GSTN Enhancements

✔ Fair and law-aligned interest calculation
✔ Reduced disputes on interest liability
✔ Better tracking of prior-period tax payments
✔ Improved automation and compliance accuracy

Key Takeaway for Taxpayers

Maintaining sufficient balance in the Electronic Cash Ledger before the due date can significantly reduce interest liability on delayed GSTR-3B filing.

Taxpayers and professionals should carefully review auto-populated figures and ensure timely compliance to avoid unnecessary interest costs.

Disclaimer

This article is prepared for educational and informational purposes only and does not constitute legal advice. Taxpayers are advised to refer to applicable provisions of the GST Act, Rules, Notifications, and official GSTN advisories for statutory compliance.