Interest on net GST liability payable from 1st September 2020

Interest on net GST liability paid by debiting electronic cash ledger payable on delayed returns from 1st September 2020

Section 50 of the CGST Act 2017 provides for levy of interest on delayed payment of tax. The interest is also payable on claiming excess input tax credit (ITC).

The Finance (No. 2) Act 2019 had amended the said section by providing that the interest on tax payable in respect of supplies made during a tax period and declared in the return for the said period, filed after due date prescribed in section 39 of the CGST Act (except where return is furnished after commencement of demand/recovery proceedings u/s 73 or 74, shall be levied on that portion of tax that is paid  by debiting the electronic cash ledger.

In other words, interest on net GST liability shall be paid on net tax liability.

Earlier the 39th GST Council meeting declared that the interest on delayed GST payments would be applicable only on net cash tax liability after the deduction of the available input tax credits. 

The CBIC has issued notification providing that the amendment made by the Finance Act 2019 shall become applicable from 1^st September, 2020.

CBIC has further clarified that the Notification relating to interest on delayed payment of GST has been issued prospectively due to certain technical limitations. However, it has assured that no recoveries shall be made for the past period as well by the Central and State tax administration in accordance with the decision taken in the 39^th Meeting of GST Council. This will ensure full relief to the taxpayers as decided by the GST Council.

The text of the notification is as under:

MINISTRY OF FINANCE
(Department of Revenue)
(Central Board of Indirect Taxes and Customs)

Notification No. 63/2020–Central Tax

New Delhi, the 25th August, 2020

G.S.R. 527(E).—In exercise of the powers conferred by sub-section (2) of section 1 of the Finance (No. 2) Act, 2019 (23 of 2019), the Central Government hereby appoints the 1stday of September, 2020, as the date on which the provisions of section 100 of the Finance (No. 2) Act, 2019 (23 of 2019), shall come into force.

[F. No. 20/06/09/2019-GST]

PRAMOD KUMAR, Director.

Download Notification Click Here >>

• Penalty u/s 271B for unfilled column 40 in Tax Audit Report Form 3CD deleted by ITAT
• Merely ex-parte rectifying computation without amending assessment order not make it nullity- ITAT
• Once assessee discharges primary onus, it shifts to AO to bring evidence to contrary – ITAT
• Cost Inflation Index for FY/Tax Year 2026-27 notified by CBDT. See Up-to-date Table of CII
• Power of CIT(A) u/s 251(1)(a) to remand case can be exercised only in best judgment assessment