The CBIC said that The GST laws, as of now, permit interest calculation on delayed GST payment on the basis of gross tax liability.
- There have been cases where GST assessees have paid taxes after the due date but did not pay the interest due on account of delayed payment
- The CBIC said GST laws, as of now, permit interest calculation on delayed GST payment on the basis of gross tax liability
The CBIC also said that, In spite of this position of law and Telangana High Court’s order, the Central Government and several State Governments, on the recommendations of GST Council, amended their respective CGST/SGST Acts to charge interest on delayed GST payment on the basis of net tax liability. Such an amendment will be made prospectively. The States of Telangana and West Bengal are in the process of amending their State GST Acts. After the process of amendment is complete, the changed provisions can be put in operation for the entire country.
Recently, the Central Board of Indirect Taxes and Customs (CBIC) had said that 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 CBIC issued such notice after doubts were raised by field formations, whether the interest has to be paid on gross tax liability or on the net cash liability. The GSTR-3B Tax Liability notice stated section 50 (1) of the Central Goods and Service Tax (CGST) Act and stated that the provision is very clear on the tax liability in this regard.
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 and to furnish a weekly report of GSTIN wise recovery of interest made in this regard.
There have been cases where GST assessees have paid taxes after the -due date but did not pay the interest due on account of delayed payment.
There were doubts about 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.