Payment of interest

Rule 7(2)(a) of draft GST ITC Rules provides that where the aggregate of the amounts calculated finally in respect of ‘D1’ and ‘D2’ exceeds the aggregate of the amounts determined under sub-rule (1) in respect of ‘D1’ and ‘D2’, such excess shall be added to the output tax liability of the registered person for a month not later than the month of September following the end of the financial year to which such credit relates and the said person shall be liable to pay interest on the said excess amount at the rate specified in subsection (1) of Section 50 for the period starting from first day of April of the succeeding financial year till the date of payment;

Issue

The method prescribed for estimation is based on the turnover of the month which can vary, hence interest cannot be demanded from first day of the month

Suggestion

It is suggested that interest be payable after the due date of return for September following the end of financial year or filing of annual return whichever is earlier.

Source ICAI Suggestions on GST Rules Submitted to Govt of India