IS INTEREST WILL BE LEVIED U/S 50 FOR DEFAULT IN MAKING PAYMENT TO SUPPLIER WITHIN 180 DAYS

[PRAVEEN SONI]

IS INTEREST WILL BE LEVIED U/S 50 FOR DEFAULT IN MAKING PAYMENT TO SUPPLIER WITHIN 180 DAYS?

[Rajagopalan Ranganathan]

Sir,

If there is delay in payment made to supplier after the period mentioned in the contract, then interest is payable by the receiver of goods or services or both to the supplier along with the amount mentioned in the invoice.  Section 50 of CGST Act deals with interest payable when there is a delay in payment of gst to Government.

[KASTURI SETHI]

As per Rule 37 (1), interest is payable from the date of issue of invoice after crossing 180 days.

RULE 37. Reversal of input tax credit in the case of non-payment of consideration. — [(1) A registered person, who has availed of input tax credit on any inward supply of goods or services or both, other than the supplies on which tax is payable on reverse charge basis, but fails to pay to the supplier thereof, the amount towards the value of such supply [, whether wholly or partly,] along with the tax payable thereon, within the time limit specified in the second proviso to sub-section (2) of section 16, shall pay [or reverse] an amount equal to the input tax credit availed in respect of such supply [, proportionate to the amount not paid to the supplier,] along with interest payable thereon under section 50, while furnishing the return in FORM GSTR-3B for the tax period immediately following the period of one hundred and eighty days from the date of the issue of the  invoice.

[KALLESHAMURTHY MURTHY K.N.]

 Dear Sir, 

Whether the interest is payable from the date of invoice or from the date of availment of ITC. It is because the question of the reversal of ITC arises only if the ITC is availed.

AI Summary

Reversal of input tax credit triggers interest under Section 50 when supplier payment is not made within the prescribed period.
Rule 37(1) requires that where a registered person availed input tax credit but fails to pay the supplier within the specified period, the person must pay or reverse an amount equal to the ITC availed and discharge interest under Section 50 while furnishing FORM GSTR-3B for the tax period immediately following one hundred and eighty days from the date of issue of the invoice. A question persists whether interest runs from the invoice date or from the date ITC was availed.