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Interest on delayed GST payment will now be calculated on net tax liability - (15 Feb 2020)

Goods and Services Tax

The Central Board of Indirect Taxes and Customs (CBIC) released a statement clarifying that, interest payable on delayed payment of GST will be calculated on net tax liability. To give effect to same, law is amended. The Central Board of Indirect Taxes & Customs (CBIC) has asked GST officials to recover interest of nearly Rs. 46,000 crore on account of delayed payment of the Goods & Services Tax (GST). The Central and several State Governments have prospectively amended the GST Acts to collect interest on net tax liability.

Various cases have been reported, where GST assessees have paid taxes after due date but did not pay the interest due on account of delayed payment. There were doubts on whether the interest was to be paid on gross tax liability or net tax liability. The CBIC had said that, interest was to be paid on tax liability either through cash or utilisation of input tax credit. Taxpayers who have filed their returns in GSTR-3B Form are required to pay interest on the total amount of tax liability shown in the form. The law cast a liability on taxpayers to assess and pay interest on delayed payment of tax.

Telangana HC (Hyderabad) in Megha Engineering & Infrastructures Ltd. vs. The Commissioner of Central Tax dismissed the assessee’s writ and held that interest under Section 50 of Central goods and Service Tax Act, 2017 is payable on total tax liability. The Board has requested all Principal Chief Commissioners and Chief Commissioners of Central Tax to look into the issue personally and to urge the field formations under their jurisdiction for making recovery of applicable interest from the identified taxpayers.


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