Interest Calculation u/s 50 of CGST Act

[PANKAJ KUMAR]

Hi..

We had liability for the month of July 2018 ₹ 50 Lakh and CENVAT of ₹ 45 Lakh, net liability comes to ₹ 5 lakh. my query is on which amount we have to pay interest u/s 50 of CGST act.

We have to pay interest on ₹ 50 Lakh as liability still not set off at the portal?

[KASTURI SETHI]

You are required to pay interest on RS.50 lakhs as Liability was not set off and not any amount was credited into Govt . Account.

[PAWAN KUMAR]

rightly explained by kasturi sir. on total amount of rs. 50 lakh, interest is payable.

[YAGAY and SUN]

We endorse the views of our Experts.

[Mahadev R]

Conservative view is to pay on full 50 lakhs. However, the option of paying interest only on ₹ 5 lakh could be considered now. There is also proposal to amend the law to change the provision to levy interest only on balance amount. Future decisions could help us till department identifies this.

[KASTURI SETHI]

In such a situation, when notification is issued, it will be prospective and not retrospective. It will take time as such amendment may cause a huge revenue loss to Govt. It will have many repercussions. Let us wait for the issuance of notification.

[Ganeshan Kalyani]

Interest is payable on fifty lac because unless the liability is adjusted against the set off in the electronic credit ledger the liable is considered to be unpaid. Obviously there is scope to argue that having ITC balance in the ledger and not allowed to consider for the purpose of arriving at payment of interest on delayed payment. Therefore, in the GST council meeting held on 22nd December, it is recommended that available ITC shall be considered incase of payment is delayed and interest is triggered. However , the notification giving effect to the recommendation is yet to be published.

AI Summary

Interest under Section 50: payable on gross tax liability absent ITC credit, with amendment recommendation pending.
Interest under Section 50 is generally computed on the full tax liability when the liability remains unpaid in the electronic cash account because ITC merely available in the electronic credit ledger is not treated as payment to Government; a policy recommendation to consider available ITC for interest computation exists but requires prospective notification or amendment.