Interest in GST

[Bibhu Tripathy]

Dear experts,

I filed the returns 50 days late. I had sufficient balance in cash ledger. In the return I paid the GST on reverse charge. Should I pay the interest?

Kindly give the answer

with regards

[Vikram Bansal]

Finance Ministry has fixed September 1 as appointed date for charging interest on delayed payment of net GST liability.

Net liability refers to gross tax liability minus input tax credit. The GST Council had approved a retrospective amendment but the notification currently has only been issued for the go forward period. There are diverse opinions over this notification. Some experts feel that select taxpayers will get the benefit and there could be more litigation. However, some think that this will help assess deal with due tax cases.

[KASTURI SETHI]

Interest is payable because there is a delay in transferring the tax amount into Govt. account.Amount of tax is debited/set off only on the date of filing return and not prior to that. Having sufficient balance in Electronic Cash Ledger does not rescue you from the payment of interest.

The date of transfer of tax amount into Govt. account is the actual date of payment of tax.

[Shilpi Jain]

As far as the department is concerned interest will be levied. In case it is a considerable amount you could consider challenging in the courts since interest is compensatory in nature and should not be levied merely due to missing to file the returns with the liability entry. This is for the reason that the amount paid in the cash ledger is at the disposal of the the government and cannot be used by the taxpayer for anything else other than payment at the GST portal.

However important to note that this would be a long battle!!

AI Summary

Interest on delayed GST payment: payable from the date tax is debited to the government account despite cash ledger balance. Interest is payable on delayed GST payment because payment is effected only when the tax amount is debited/settled to the government account on filing; a balance in the Electronic Cash Ledger does not prevent interest. The department will levy interest on delayed net GST liability; a retrospective amendment was approved but notification for charging interest has been issued only for the forward period. Contested challenges are possible as interest is compensatory, but litigation may be lengthy.