GSTR-3B & GST Interest Updates 2026: Revised Rules Explained

The Goods and Services Tax Network has implemented significant system upgrades in the GST 3B filing, which will take place in January 2026, with some of them becoming effective in February 2026. These modifications are aimed at amending interest calculation, enhancing transparency in the reporting, flexibly adjusting the Input Tax Credit, and organising the refunding of interest on cancelled registration.

The updates were released on 30 January 2026 and were further elaborated on 19 February 2026. Collectively, they represent an important move to system-driven accuracy in GST compliance.

Major Changes in GSTR-3B Filing

On 30th January 2026, with further revisions made on 19th February 2026, the GSTN issued an advisory on four key changes in GSTR-3B filing.

They change the computation of the interest, usage of ITC, and how the cancelled taxpayers settle their debts.

The following is an outline of it before we delve into the details:

Revised Interest Computation In Table 5.1

From the January 2026 tax period onwards, interest calculation in Table 5.1 of GSTR 3B has been modified. The system now considers the minimum cash balance available in the Electronic Cash Ledger from the due date of filing until the date of tax payment.

Previously, the computation of interest did not sufficiently consider the available cash balance ; in most cases, taxpayers paid interest even though they had enough cash in their ledger.

The new calculation is consistent with the provision of rule 88B(1) of the CGST Rules, 2017.

The Revised Interest Formula

Interest = (Net Tax Liability - Minimum Cash Balance in ECL from due date to date of debit) x (No. of days delayed / 365) x Applicable Interest Rate

In practical terms, if funds were already available in the Electronic Cash Ledger during the delay period, interest is calculated only on the remaining unpaid portion.

Key Things to Know About Table 5.1

• Interest is auto-populated in Table 5.1 of GSTR 3B.
• The system computed amount cannot be reduced.
• Taxpayers may increase the value if self-assessment indicates a higher liability.
• The amount displayed is the minimum interest payable.
• Applicable for delayed returns of January 2026 onwards, reflected in February 2026 GSTR 3B.

Taxpayers are advised to reconcile system-generated values with internal records before final submission.

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Auto-Population of Tax Liability Breakup Table (Table 6.1)

From January 2026, the GST portal auto-populates the Tax Liability Breakup Table in GSTR 3B. This table captures supplies relating to earlier tax periods that are reported in the current period’s GSTR 1, GSTR 1A, or Invoice Furnishing Facility, but for which tax is discharged in the current period.

The system now maps the liability based on document dates linked to those supplies.

Access Path On Portal

Login > GSTR-3B Dashboard > Table 6.1 (Payment of Tax) > Tax Liability Breakup

Key Considerations

• Auto-populated figures are suggestive.
• Values can be modified upward.
• Supports accurate interest determination under Section 50 of the CGST Act, 2017.

This enhancement reduces manual tracking of prior period liabilities and improves transparency in cross-period reporting.

Flexible ITC Adjustment For IGST Liability

After IGST input tax credit is fully used, any available CGST or SGST ITC can be used to pay IGST liability in any order by the taxpayers.

This flexibility was originally planned to be applied as of January 2026, but was made clear by the 19 February 2026 update to be applied as of the February 2026 tax period.

Compliance Significance

• Greater flexibility in ITC planning.
• Reduced cash flow pressure where credit pools are uneven.
• More efficient management of accumulated credits.

Businesses with disproportionate IGST and CGST or SGST credit balances are likely to benefit from this change.

Interest Collection Through GSTR 10 For Cancelled Registrations

In cases where a taxpayer’s GST Registration is cancelled, and the final applicable GSTR 3B is filed after the due date, interest on delayed filing will be levied and collected through GSTR 10, the Final Return.

Practical Implications

• Interest consolidated within final compliance.
• Streamlined closure process.
• Reduced post-cancellation disputes.

Tax advisors assisting in registration cancellation should ensure timely filing of the last GSTR 3B to prevent additional interest exposure.

Compliance Action Points

Conclusion

These enhancements reflect the continued strengthening of the GST compliance framework. The recognition of Electronic Cash Ledger balances in interest computation represents a significant corrective measure in favour of taxpayers.

In the meantime, the system-based liability mapping and flexibility of ITC increase the clarity of operations. These updates are advised to be made familiar to taxpayers and professionals to modify internal compliance processes.