TaxTMI 
TaxTMI 
If ITC is wrongly claimed excess or claimed though not eligible. 1) Under which Section it is mentioned that Interest is not required to be paid if sufficient balance is maintained to cover the excess credit 2) This provision is valid from which date?
Interest on excess / wrong ITC
23 Apr 2021 
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Interest on undue input tax credit: statutory charge under Section 50(3) but disputable where only ledger entries exist.
Interest is chargeable under Section 50(3) of the CGST Act for undue or excess input tax credit claims or undue reductions in output tax liability; the statute does not exempt interest where ledger balances remain sufficient. Section 42(10)'s matching mechanism that would operationalise such claims is not yet in force pending return-matching notifications. Judicial authority indicates interest may require proof of actual utilization of credit rather than mere electronic ledger reflection, and taxpayers can therefore dispute interest demands on factual and legal grounds. (AI Summary)
Interest is chargeable under Section 50(3) of the CGST Act for undue or excess input tax credit claims or undue reductions in output tax liability; the statute does not exempt interest where ledger balances remain sufficient. Section 42(10)'s matching mechanism that would operationalise such claims is not yet in force pending return-matching notifications. Judicial authority indicates interest may require proof of actual utilization of credit rather than mere electronic ledger reflection, and taxpayers can therefore dispute interest demands on factual and legal grounds. (AI Summary)