TaxTMI 
TaxTMI 
Considering GST Rule 37 read with Rule 88B(3), Section 16(2)(c) & Section 50(3), Is interest payable even if ITC availed earlier is not utilized?
Considering GST Rule 37, Is interest payable even if ITC availed earlier is not utilized?
12 Mar 2023 
4 Replies 
2696 Views Asked by
Interest on input tax credit: reversal within prescribed time prevents interest even if credit was temporarily utilised.
Whether interest is payable when ITC is availed but later reversed depends on interaction between the tax-payment interest provision and the procedural reversal rule. One practitioner view holds that if ITC is reversed or paid back under the procedural reversal rule within the prescribed time limit, no interest under the tax-payment interest provision is attracted even if the credit was utilised temporarily. An additional note states that following the rule amendment, unutilised credit taken for specified delayed payments and reversed will not attract interest, unlike under earlier provisions. (AI Summary)
Whether interest is payable when ITC is availed but later reversed depends on interaction between the tax-payment interest provision and the procedural reversal rule. One practitioner view holds that if ITC is reversed or paid back under the procedural reversal rule within the prescribed time limit, no interest under the tax-payment interest provision is attracted even if the credit was utilised temporarily. An additional note states that following the rule amendment, unutilised credit taken for specified delayed payments and reversed will not attract interest, unlike under earlier provisions. (AI Summary)