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Applicable rate of interest on reversal of ITC due to non filing of return by the suppliers

29 April 2020

what is the applicable rate of interest on reversal of ITC due to non filing of return by the suppliers ? Is there any difference in the interest rate if reversal for the Fy 17-18 made during the Fy 19-20.

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3 Replies

anuj agarwal (29 Points)
Replied 29 April 2020

Applicable interest rate is 18%p.a. for CGST and SGST each refer section 50 of CGST Act 2017 for the same.
Beside the fact stated there is no difference in interest rate.

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CA Mayank A Jain (Chartered Accountant in Practice) (1260 Points)
Replied 29 April 2020

Interest at the rate of 18% p.a. would be payable. No change in interest rate through out the GST period. However interest may not be paid where sufficient ITC is available in e-credit ledger.

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CA Altamush Zafar (GST Consultant) (15986 Points)
Replied 29 April 2020

As per section 50(3) interest is applicable @ 24% where there is mismatch of ITC between supplies shown by suppliers and ITC taken by recipients. However this section is flawed as it pertains to GSTR-2 & GSTR-3.

The condition to avail ITC as per Act is payment of Tax by supplier and therefore it is effected by GSTR-3B. Thereis no way to determine whether the supplier has shown specific supplies of specific recipient in GSTR-3B as it has consolidated amounts.

Condition of availing ITC as per Rule 36(4) is considered ultra vires by many professionals and interest on excess ITC due to this is not governed by any section.

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