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Interest Payable under GST

Pankaj Arora (Learner) (3134 Points)

25 December 2018

Hi..

We had liability for the month of July 2018 Rs 50 Lakh and CENVAT of Rs 45 Lakh, net liability comes to Rs 5 lakh. my query is on which amount we have to pay interest u/s 50 of CGST act.

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5 Replies

Jhalak Jain (118 Points)
Replied 25 December 2018

Section 50 provides that interest is required to be paid on any amount of tax which is remain unpaid before availing input tax credit of tax paid on purchases, after the due date of furnishing the return under section 39.
And hence you are liable to interest on gross amount i.e 50 lakh

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Pankaj Arora (Learner) (3134 Points)
Replied 25 December 2018

Hi, thanks for reply.. but I am not getting where it's written under section 50 that before availing input tax credit of tax paid on purchases.

[1] Every person who is liable to pay tax in accordance with the provisions of this Act or the rules made thereunder, but fails to pay the tax or any part thereof to the Government within the period prescribed, shall for the period for which the tax or any part thereof remains unpaid, pay, on his own, interest at such rate, not exceeding eighteen per cent., as may be notified by the Government on the recommendations of the Council.

[2] The interest under sub-section [1] shall be calculated, in such manner as may be prescribed, from the day succeeding the day on which such tax was due to be paid.

[3] A taxable person who makes an undue or excess claim of input tax credit under sub-section [10] of Section 42 or undue or excess reduction in output tax liability under sub-section [10] of Section 43, shall pay interest on such undue or excess claim or on such undue or excess reduction, as the case may be, at such rate not exceeding twenty-four per cent., as may be notified by the Government on the recommendations of the Council.

Asif Rahaman (95 Points)
Replied 25 December 2018

Interest to be paid on net payable i.e. 5 lk .

Pankaj Arora (Learner) (3134 Points)
Replied 25 December 2018

@ Mr Asif, in 31st GST council meeting FM said that now interest will be payable on net cash liability that means for now interest is payable in gross tax liability.

pritesh (CA Final student) (7101 Points)
Replied 25 December 2018

you are required to pay interest on gross amount as per sec 50

But as per 31st gst council meeting the are going to make amendment in sec 50 by saying that interest will be paid on net payable amount.