GST Interest Rates : Free Study Material

Here is the Free study Material on GST interest Rates

Video Tutorial by CA Satbir Singh (Voice in Hindi , Slides in English)  explaining GST Interest Rates 

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GST Interest Rates : General Points

Comment

New GST Due Dates I Interest I Late Fees I ITC I Feb 2020 to May 2020

1. GST Interest has to be paid if

   • Delayed payment of tax

   • Undue or excess claim of input tax credit
   • Undue or excess reduction in output tax liability
2. There is no specific provision for payment of interest on the interest amount due.
3. GST interest has to be paid from Electronic Cash ledge and Electronic Credit ledger can not be used to pay interest .
4. If GST Refund is due then it  will not be granted automatically. Application has to be filed for refund. Do not make delay in submission of Application for Refund.

GST Interest Rates for delayed payment of tax

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 – Section 50(1) of CGST Act .

The interest rate is 18% w.e.f. 1-7-2017  under section 50 (1) of CGST Act vide  Notification No. 13/2017 – Central Tax Dated 28th June, 2017 and Notification No. 6/2017 – Integrated Tax Dated 28th June, 2017 

Comment : GST Interest has to be paid ” on his own”  i.e even without a demand because taxpayer is making belated payment of tax.

Refer Pay GST Interest on Cash and ITC (Gross Tax Liability) if delay in filing Returns : HC

GST Interest Rates for wrong Input Tax Credit / Reduction in output Tax Liability

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 at such rate not exceeding twenty-four per cent, as may be notified  by the Government on the recommendations of the Council. – Section 50(3) of CGST Act .

The Interest Rates is 24%  w.e.f 01.07.2017  under Section 50(3) of CGST Act vide Notification No. 13/2017 – Central Tax Dated 28th June, 2017 and Notification No. 6/2017-Integrated Tax dated 28-6-2017. 

GST Interest Rates on delayed refunds.

If any tax ordered to be refunded under  section 54(5) of CGST act 2017 to any applicant is not refunded within sixty days from the date of receipt of application under  section 54(1) of CGST act 2017 , interest at such rate not exceeding six per cent as may be specified in the notification issued by the Government on the recommendations of the Council shall be payable in respect of such refund from the date immediately after the expiry of sixty days from the date of receipt of application under the said sub-section till the date of refund of such tax:  section 56 of CGST act 2017 

The Interest Rates is 6%  w.e.f 01.07.2017  under section 56 of CGST Act 2017 by Notification No. 13/2017 – Central Tax Dated 28th June, 2017 and Notification No. 6/2017-Integrated Tax dated 28-6-2017. 

Provided that where any claim of refund arises from an order passed by an adjudicating authority or Appellate Authority or Appellate Tribunal or court which has attained finality and the same is not refunded within sixty days from the date of receipt of application filed consequent to such order, interest at such rate not exceeding nine per cent as may be notified   by the Government on the recommendations of the Council shall be payable in respect of such refund from the date immediately after the expiry of sixty days from the date of receipt of application till the date of refund.-  proviso to section 56 of CGST act 2017 

The Interest Rates is 9%  w.e.f 01.07.2017  under proviso to section 56 of CGST Act 2017 by Notification No. 13/2017 – Central Tax Dated 28th June, 2017 and Notification No. 6/2017-Integrated Tax dated 28-6-2017. 

Comment : If refund is rejected by adjudicating authority but sanctioned by appellate authority, interest will be payable sixty days after submission of application  after receipt of order of appellate authority and not from date or order of adjudicating authority. This is highly unfair.

Refund will not be granted automatically. Application has to be filed for refund. Do not make delay in submission of Application for Refund.

GST Interest Rates on withheld Refunds

Where a refund is withheld under section 54 (11) of CGST act 2017, the taxable person shall, notwithstanding anything contained in section 56, be entitled to interest at such rate not exceeding six per cent as may be notified  on the recommendations of the Council, if as a result of the appeal or further proceedings he becomes entitled to refund. – section 54 (12) of CGST Act

The interest rate is 6% w.e.f. 1-7-2017  under section 54 (12) of CGST Act . Notification No. 13/2017 – Central Tax Dated 28th June, 2017 and Notification No. 6/2017-Integrated Tax dated 28-6-2017.

How to calculate GST Interest Rates

The Interest has to be calculated from the next day on which tax was due.

As per Section 50(2) of CGST Act 2017 :  Interest on delayed payment of tax .

The interest under section 50(1) of CGST Act 2017 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.

For example, a taxpayer fails to make a tax payment of Rs. 10,000 for the month of January 2018 (due date -20th Feb 2018). He makes the payment on 20th March  2018. Interest will be calculated as follows: Rs. 10,000 * 28 days/365 * 18% = Rs. 138

[ Note : Rate of interest is 18% if person fails to pay tax ]

Refer Pay GST Interest on Cash and ITC (Gross Tax Liability) if delay in filing Returns : HC

Refer GST Interest Calculation : day wise or month wise ?

How to Pay GST Interest

Every deposit made towards tax, interest, penalty, fee or any other amount by a taxable person by internet banking or by using credit/debit cards or National Electronic Fund Transfer [NEFT] or Real Time Gross Settlement [RTGS] or by such other mode and subject to such conditions and restrictions as may be prescribed. The payment shall be credited to the electronic cash ledger of such person. – section 49(1) of CGST Act.

Comment : GST interest has to be paid from Electronic Cash ledge and Electronic Credit ledger can not be used to pay interest .

Rounding off of tax etc. – The amount of tax, interest, penalty, fine or any other sum payable, and the amount of refund or any other sum due, under the provisions of the Act shall be rounded off to the nearest rupee and, for this purpose, where such amount contains ater part of a rupee consisting of paise then, if such part is fifty paise or more, it shall be increased to one rupee and if such part is less than fifty paise it shall be ignored – section 170 of CGST Act.

Where the GST interest will be debited ?

The electronic liability register specified under section 49(7) shall be maintained in form GST PMT-01 for each person liable to pay tax, interest, penalty, late fee or any other amount on the Common Portal and all amounts payable by him shall be debited to the said register – Rule 85(1) of CGST and SGST Rules, 2017.

Thus GST interest that will be debited to Electronic Liability Register

Relevant Section of CGST Act 2017 on GST Interest Rates

Section 49 CGST Act 2017 ; Payment of tax, interest, penalty and other amounts.

Section 50 of CGST Act 2017 :  Interest on delayed payment of tax .

Section 54 CGST Act 2017 ; Refund of tax.

Section 56 CGST Act 2017; Interest on delayed refunds.

Relevant Notifications on GST Rates of Interest

Notification No 31/2020 Central Tax : GST Interest Waiver

6% Rate of Interest under sub-section (12) of section 54 prescribed by Notification No. 13/2017 – Central Tax Dated 28th June, 2017

6% rate of interest under sub-section (12) of section 54 by Notification No. 6/2017 – Integrated Tax Dated 28th June, 2017 

18% Rate of Interest under Sub-section (1) of section 50 prescribed under CGST Act 2017 vide  Notification No. 13/2017 – Central Tax Dated 28th June, 2017

18% rate of interest under sub-section (1) of section 50 by Notification No. 6/2017 – Integrated Tax Dated 28th June, 2017 

24%  Rate of Interest under Sub-section (3) of section 50 prescribed under CGST Act 2017 vide  Notification No. 13/2017 – Central Tax Dated 28th June, 2017

24% rate of interest under sub-section (3) of section 50 by Notification No. 6/2017 – Integrated Tax Dated 28th June, 2017 

6% Rate of Interest under  section 56 prescribed under CGST Act 2017 by Notification No. 13/2017 – Central Tax Dated 28th June, 2017

9% Rate of Interest under proviso to section 56 prescribed under CGST Act 2017 by Notification No. 13/2017 – Central Tax Dated 28th June, 2017

9% rate of interest under provisio  section 56 of CGST Act, 2017 Notification No. 6/2017 – Integrated Tax Dated 28th June, 2017 

GST Judgments on GST Interest

GST Notice demanding Interest not valid as SCN not issued : HC

GST Order levying Interest not Valid as passed without hearing Taxpayer : HC

GST Authority to pay IGST refund with interest from date of shipping bill after following due procedure: HC

for more information  visit Govt Website on GST

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