Input availed but not utilised

[Vinod Maheswari]

I have availed IGST Input Credit of ₹ 500000 in August 2017 . out of this I have used IGST credit of ₹ 200000. Now in January 18 I came to know that ₹ 300000 credit was wrongly availed. Now my question is

if I am reversing IGST Credit by my self than I have to pay Interest or not . Please quote the Section or rules in your answer.

I have read section 73,74, section 42, 43 in which they say that interest is payable on wrongly availed input but all these section define regarding time when offence in come notice of department/System.

So Please clarify whether in GST Interest is payable just of Input taken or its payable on Input taken and utilsed.

[Nitika Aggarwal]

Dear Sir,

Keeping in view the provisions of Section 50 of CGST Act, 2017 read with rule 37 of CGST Rules, 2017, the Querist is required to pay the amount of Interest @18% from the date of wrongly availed credit till the date of its reversal thereof.

For the sake of your ready reference, relevant provisions of the act are enclosed herewith

"Interest on delayed payment of tax

50. (1) Every person who is liable to pay tax in accordance with the provisions of this Act or the rules made thereunder, but fails to pay the tax or any part thereof to the Government within the period prescribed, shall for the period for which the tax or any part thereof remains unpaid, pay, on his own, interest at such rate, not exceeding eighteen per cent., as may be notified by the Government on the recommendations of the Council.

(2) The interest under sub-section (1) shall be calculated, in such manner as may be prescribed, from the day succeeding the day on which such tax was due to be paid.

(3) A taxable person who makes an undue or excess claim of input tax credit under sub-section (10) of section 42 or undue or excess reduction in output tax liability under sub-section (10) of section 43, shall pay interest on such undue or excess claim or on such undue or excess reduction, as the case may be, at such rate not exceeding twenty-four per cent., as may be notified by the Government on the recommendations of the Council."

Regards

Nitika Aggarwal

9999804960

[Vinod Maheswari]

Thanx Nitika for quick reply but I have one concerned.

Section 42(10) & section 43(10) talks about after detection of error from GST Portal or department and rule 37 applied only in case of non payment to vendor beyond 180 days so here we voluntarily reversing input.

In case of rectification of error section 39(9) says rectification can be made subject to interest.

While section 50(1) for interest takes about whenever tax dues is not paid than only we have to pay interest, so in my case Input are reversed not on direction of GST Department but it self made so to the best on my knowledge only section 39(9) comes in picture. Can u please analysis the same .

Thanx

[Ganeshan Kalyani]

The section says availed or utilised. So interest becomes payable on ₹ 3 lacs. However, you may fight.

AI Summary

Interest on wrongly availed input tax credit is payable from date of wrongful availing until reversal, even if voluntarily reversed. Whether interest is payable on wrongly availed IGST input tax credit and whether it applies only to utilised credit or to the entire availed amount. The document notes statutory provisions requiring payment of interest on delayed tax or on undue or excess input tax credit, prescribes interest calculated from the date the credit was wrongly availed until reversal, and records a competing view that rectification rules and portal-detection provisions may bear on voluntary reversals.