# TOS for Special Charges — Interest, Late Fees, Penalty (Section 12(6) / 13(6))

When a supplier receives additional consideration in the form of interest, late fee, or penalty for delayed payment of consideration, the TOS for such additional amount is the date on which the supplier receives such addition in value.

## Key Points

These addition-in-value amounts are taxed separately from the original supply.
TOS is receipt-based — the supplier needs to discharge GST only when they actually receive the late fee / interest.
Same rule applies to both goods [Sec 12(6)] and services [Sec 13(6)].
Rate and place of supply follow the original underlying supply (since this is additional consideration for that supply).

Worked example

### Example 1

Example 1: A supplied goods worth ₹1,00,000 on 1 April. Buyer paid the principal on time but delayed and paid ₹2,000 interest on 15 July. TOS for the ₹2,000 interest = 15 July (date of receipt of addition in value). GST is payable in the July return period.

### Example 2

Example 2: A consultant charged late fee of ₹500 on 10 Sept for a service invoice dated 1 March. TOS for the late fee = 10 Sept, even though the original supply happened in March.

⚠️ Common exam mistakes

Treating interest/late fee as part of the original invoice's TOS — it's a separate, receipt-based event.
Forgetting that interest/late fee carries the SAME GST rate as the principal supply.
Paying GST on accrued (but unreceived) interest — TOS is receipt-based here.

Bare-Act text Section 12(6) and Section 13(6) · CGST Act, 2017 · click to expand

Section 12(6) / 13(6): The time of supply to the extent it relates to an addition in the value of supply by way of interest, late fee or penalty for delayed payment of any consideration shall be the date on which the supplier receives such addition in value.

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TOS of Special Charges - Interest, Late Fees, Penalty

Worked example

⚠️ Common exam mistakes