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Refund of unutilized itc

13 April 2020

when input tax credit availed but not utilized and after that credit has to be reversed, whether any interest to be payable on the reversal amount?

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9 Replies

RAJA P M ("Do the Right Thing...!!!") (128101 Points)
Replied 13 April 2020

Yes... Interest is applicable if it's utilized or not...

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Archana Agarwal (37 Points)
Replied 13 April 2020

At what rate?

RAJA P M ("Do the Right Thing...!!!") (128101 Points)
Replied 13 April 2020

Interest rate @ 24%p.a.

(Guest)

Reason of reversal??

Pankaj Rawat (GST Practitioner) (55057 Points)
Replied 13 April 2020

Yes interest @ 24% is applicable (Refer Section 50)

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CA Sachin M Jain (CA | GST | Refunds | Advisory | Litigation) (1351 Points)
Replied 15 April 2020

Unlike Service tax law, there is no difference in ITC CLAIMED and ITC UTILISED, so if u have claimed excess ITC then you will have to reverse ITC along with interest @ 24%. However, you may reverse ITC without any interest if the amount of interest is too huge and can then later defend to the authority.

Further clarification contact - CA SACHIN M JAIN | 8097515447 | casachinmjain @ gmail.com

CA Ankit Kumawat (CHARTERED ACCOUNTANT) (371 Points)
Replied 30 April 2020

No, there will not be charges any interest.
In case of M/S Commercial steel Engineering v/s state of bihar "Hon’ble Patna High Court held that ITC availed but not utilized for tax payment doesn’t invite penal consequences of Section 73 of CGST Act, 2017 and interest cannot be recovered on mere availment of ITC which was not utilized"

MARIES (GST Consultant) (219 Points)
Replied 01 May 2020

@ Archana Agarwal,

section 50(3) provides interest @ 24 %, if excess/undue ITC availed under section 42(10) or 43(10) which refers to ITC availed (mis-match) and utilized for payment of output tax liability only. Hence, ITC availed wrongly but not utilized for payment of tax, then no provision under the GST Act levies interest thereon.

CA Altamush Zafar (GST Consultant) (15986 Points)
Replied 01 May 2020

If voluntary reversal then no interest.

If reversal due to some provision of the law then interest is dependent under which provision credits are being reversed. It can be 18%, 24% or no interest at all.