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payment to creditor After 180 days?

20 August 2018

1. whether interest is still applicable on itc reversal after 180 days? if yes then what is rate of interest?
2. whether itc be reversed fully or proportionately in case of partly payment?

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9 Replies

Anirban Sinha (CA in service) (727 Points)
Replied 20 August 2018

Yes interest is applicable @ 18. Yes itc should be reversed propotionately.

Ankush Kumar (233 Points)
Replied 20 August 2018

thanks for reply. is there any amendment in applicability of interest?

Pankaj Rawat (GST Practitioner) (55037 Points)
Replied 20 August 2018

As per section 50(3) Rate of interest is 24%
hence reverse ITC &. deposit with interest @ 24℅

Pankaj Rawat (GST Practitioner) (55037 Points)
Replied 20 August 2018

There was to abolished of such interest in press release but till date there is no notification in this regard from CBEC so its still applicable

Anirban Sinha (CA in service) (727 Points)
Replied 20 August 2018

Check Rule 37(3) interest will be payable @ 18%.

Pankaj Rawat (GST Practitioner) (55037 Points)
Replied 20 August 2018

dear anirban

rule 37(3) says for interest to refer section 50 cgst act

and as per section 50 (3) cgst for interest will be payable @ 24%

Anirban Sinha (CA in service) (727 Points)
Replied 20 August 2018

Yes, but not as per 50(3), rule 37(3) tells that interest shall be payable as per 50(1) not as per 50(3) which is @ 18%. See bare act it is said as interest shall be sub-section 1 of sec 50.

Pankaj Rawat (GST Practitioner) (55037 Points)
Replied 20 August 2018

As per section 50(3)

3] 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 such rate not exceeding twenty-four per cent., as may be notified by the Government on the recommendations of the Council.

Means when you have taken wrong credit or when ITC has to be reverse under law the intt. payable is 24%

And
As per 50(1)
if tax liability or output liability is not paid in time the intt. rate is 18%

Hence in this case the ITC being reversed so rate of intt. will be 24%

Anirban Sinha (CA in service) (727 Points)
Replied 21 August 2018

See the act if the payment to supplier if not made within 180days as per rule 37(3) interest will be payable @ 18 as sec 50(1). It is written in the act.