Applicable Interest on excess claim of interest, though the credit & cash ledger balances are more

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This query is : Resolved

Venkateshwarlu Pulluri (Querist)

10 August 2022 Dear sir/s,

one of my client claimed excess credit of ITC , but where as the he is having credit ledger and cash ledger more than the excess ITC claimed, the excess claimed is reversed, but the GST officer asking for payment of interest though the credit & cash ledgers cumulatively maintained more than excess claimed, please guide me in this regard

Udaya Chandran

Udaya Chandran (Expert)

11 August 2022 Please note, as per the CGST Rule 88B, inserted vide Notification No.14/2022-Central Tax dated 5th July 2022, interest on ITC wrongly availed shall be applicable only when such ITC is utilised to discharge liability. When the balance in electronic credit ledger is higher than the ITC wrongly availed and utilised, no interest is applicable. Interest is applicable only when the ITC wrongly availed and utilised falls below the balance in electronic credit ledger. This rule is applicable retrospectively, from 1st July 2017.

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