Interest on GST liability

[Deepak Bubna]

Hello everyone,

Can Interest on tax liability not be computed to the extent input credit is available in electronic credit ledger at the time such tax became payable ? In simple words , if tax demand is Rs. 100 and electronic credit ledger has Rs. 80 , whether interest is to be computed on Rs. 100 or Rs. 20 (Rs. 100- Rs. 80) ?

AI Summary

Interest on GST liability: availability of electronic input tax credit may not eliminate interest unless statutory conditions are met.
Interest on GST liability is governed by Section 50 and Rule 88B; mere availability of input tax credit in the electronic ledger does not automatically prevent interest unless statutory provisos and conditions are satisfied. Where ITC was properly availed, subsequent reversal or tax payment due to later events does not necessarily make the initial availment wrongful, and time limits for reversal and departmental claims for interest on late reversal remain relevant.