Interest and panelty on reversal of ITC

[mk Jain]

If I have balance in E Cash ledger and at the time of audit found that taken some wrong ITC then any interest or panelty liablity on reversal inder Section 73, 74 or 50.

M Kumar

AI Summary

Interest on Wrongly Availed ITC: 18% Rate per Section 50(1) and Rule 88B(3); Avoid Penalties with Voluntary Reversal A discussion on the Goods and Services Tax (GST) forum addressed the issue of interest and penalties related to the reversal of wrongly availed Input Tax Credit (ITC). The consensus is that interest is payable on such ITC as per Section 50(1) and Rule 88B(3), with a rate of 18% applicable from the date of utilization until reversal. If ITC is reversed voluntarily before any departmental notice, penalties can be avoided under Sections 73(5) and 74(5). However, sufficient balance in the Electronic Credit Ledger may mitigate interest liabilities. The forum emphasized the importance of understanding the reasons for wrong ITC availment.