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Interest on delayed payment

bhaskar (Consultant) (87 Points)

05 April 2018

Suppose Mr. A has sold goods worth Rs 1 Lakh to Mr. B, say on 15/05/17. Now , the term period allowed for the payment was 15days, ie the due date was 01/06/17. The Actual payment was made on 15/08/17. Is GST applicable to Interest component considereing the transition period.

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11 Replies

(Guest)

No in your case no GST will have to be paid on Interest amount as supply was prior to GST.

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RAHIL (ACCOUNTANCY) (247 Points)
Replied 05 April 2018

Yes, GST is applicable.

(Guest)

As per GST Act,GST is payable on interest amount where such interest is payable on delayed payment of consideration for supply made under this Act.So as per my view GST is not payable.

1 Like

RAJA P M ("Do the Right Thing...!!!") (128091 Points)
Replied 05 April 2018

Yes... I agreed to Mr CA Somil Bhansali.,
GST not applicable for the interest of delayed payments of Before GST...

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RAHIL (ACCOUNTANCY) (247 Points)
Replied 05 April 2018

But , section 15(2) of CGST Act, 2017 mentions that Interest or late fee for delayed payment of any consideration for any supply should be included in the value of supply.

okay not to be included as supply was before implementaion of GST.

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RAJA P M ("Do the Right Thing...!!!") (128091 Points)
Replied 05 April 2018

But,
It's not applicable to previous law...

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RAHIL (ACCOUNTANCY) (247 Points)
Replied 05 April 2018

Yes, I agree with you sir.

Pankaj Rawat (GST Practitioner) (55052 Points)
Replied 05 April 2018

fine but previous law is no more in existence, & if today u will supply anything the current law has to be follow , so iagrre with Mr Rahul

suppose purchase in vat period but same is return in GST regime , we have to charge GST or to reverse the Input . why.....
we cannot say that it was purchase in previous law , so we will not reverse the GST

bhaskar (Consultant) (87 Points)
Replied 06 April 2018

Thank you all for the replies.

I am clear on non applicablity of tax on the interest portion till 30/06/2017. I am un clear on the applicabblity of GST on Interest on delayed payment. Will the same be covered under the definition of supply?