Interest Calculation - Late Payment of GST

[Asked by Guest]

Sir,

We have not filed GSTR 3B Return for the month of October, 2017 due to tax fully not paid.

We have already done payment of ₹ 2,00,000 out of ₹ 3,25,000 GST Liability after avail of ITC.

My question is which amount taken for interest calculation for GST late payment ₹ 1,25,000 (325000 - 200000) or 3,25,000 (Rs. 2,00,000 balance in Electronic Cash Ledger) ?

Regards,

Jatin Kumar

[KASTURI SETHI]

Rs.1,25,000/-

[CSSANJAY MALHOTRA]

₹ 3,25,000/- as return submitted but no tax payment made as of now.

Deposit of cash does not mean that the liability has been paid off till the same is debited.

Interest is applicable from due date till the debit of tax amount in E Cash / credit ledger.

With due regards to Sh Kasturi ji, GST return system has been designed in such a manner that the duty liability is to be discharged in full and not partial that’s why interest liability is accruing on total amount.

Thank you very much Kasturi Sethi Ji & Sanjay Ji,

It means balance in Electronic Cash Ledger not considered for payment of GST.

[CSSANJAY MALHOTRA]

Yes, until the same is debited. Further, you will find that GSTIN will auto calculate interest in system from due date to date of debit.

[Ganeshan Kalyani]

Sir, simplification is required on this part. That is payment is made but liability is not offset so interest need to be paid.

[CSSANJAY MALHOTRA]

Sh. Ganeshan ji,

It's admitted fact that the assesse can claim refund of funds lying in E-Cash Ledger anytime from the department as the money belongs to assessee. Govt stands to benefit only when the debit entry is made and furthermore Govt considers revenue realised as Revenue Collection.

Board has clarified this aspect in Circular No. 7/7/2017-GST dated 01.09.2017 (Para 11 & 12) issued for System based Reco of GSTR-3B

Submission of GSTR-3B without payment of taxes:

11. Where, for some reasons, the registered person has only submitted the return in FORM GSTR-3B and has not made the payment of taxes by debiting the same from his electronic cash or credit ledger, the return shall still be subjected to the reconciliation process as detailed above. Such registered person should furnish the details in FORM GSTR-1, Page 4 of 4 FORM GSTR-2 and sign and submit the return in FORM GSTR-3 along with the payment of the due taxes as per the provisions of section 49 of the Act.

However, since the payment was not made on or before the due date, the registered person shall be liable for payment of interest on delayed payment of tax starting from 26th day of August, 2017 till the date of debit in the electronic cash and / or credit ledger but will not be liable to pay any late fee provided the requisite return in FORM GSTR-3B was submitted on or before the due date.

Even in earlier law, if amount is deposited in PLA, until the same is debited, it's assessee money and not Government funds.

[Nash Industries I Pvt Ltd]

Interest is on full amount.

With due regards to experts, would like to bring to the notice that there is a recent Apex court judgment (Few days back) wherein it is said that the deposit in PLA is the payment of taxes. The govt should amend the gst provisions in line with the Apex Court ruling.

Thanks.

[CSSANJAY MALHOTRA]

Apex Court Judgement is in reference to deduction allowed under Income Tax Act for money lying in PLA account. Furthermore, the ground taken was Excise Duty is on Manufacture but payable at the time of removal, hence advance deposits to be considered as duty payments.

In GST, liability is based on supply, hence the arguments dos not support.

GST Council has already been approached for allowing part adjustments of tax payments in system. Lets hope for best to come in GST amendments.

Provisions already exists in GST law to make Tax payments in instalments subject to approval from Commissioner with payment of Interest later on.

[KASTURI SETHI]

Dear Querist,

This is gross injustice with the assessees. Common Portal System should be amended. Make a representation to GST Council.

[CSSANJAY MALHOTRA]

With due regards to all, am against any relaxation to one end if the other end suffers.

Relaxation for interest would mean Injustice with Receiver of goods, as until the tax is paid by the supplier and return is filed, Buyer will not get credit despite of entry being auto-populated from GSTR-1 to GSTR-2. The same will also cause revenue loss to Government.

Supplier should comply the provisions of law and make tax payments on time or challenge the constitution validity in High Court.

AI Summary

Interest on GST late payment accrues on full tax liability until electronic ledger debit, irrespective of ledger deposits.
Interest on delayed GST payment is levied on the full tax liability from the due date until the amount is debited from the electronic cash or credit ledger; funds merely deposited in the ledger do not count as payment for interest calculation, and filing FORM GSTR-3B without a debit entry triggers interest though late fee may be avoided if the return was timely filed.