Don’t recover interest if GST ITC reversed due to completion of building : ICAI Suggestions

Suggestions on GST Acts (July 2017) by Institute of Chartered Accountants of India

34. No interest recovery on the credit reversal on date of completion of building

Section 50 of the CGST Act provides that every person liable to pay tax in accordance with the provisions of the Act or rules made thereunder, who fails to pay the tax or any part thereof to the account of the Central or a State Government within the period prescribed, shall, on his own, for the period for which the tax or any part thereof remains unpaid, pay interest at such rates as may be notified, on the recommendation of the Council.

Issue

There may be bona fide cases where the CENVAT credit was rightly availed at the time of availment but some external event (like grant of Original Certificate for building) can result in GST not being applicable. In such cases, demanding the interest recovery on the GST amount would be inequitable.

Suggestion

It is suggested to insert a proviso in the section as under: –

“Provided that no interest would be payable in case of reversal of credit due to grant of permission or certificate in respect of building referred in Schedule II para 5(b)“.

Read ICAI Suggestions on GST Act to Govt : July 2017

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