Interest on GST

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This query is : Resolved

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This discussion clarifies how interest is calculated on Input Tax Credit (ITC) reversals under GST. Using an example, it addresses whether interest applies to the full reversed amount (Rs. 50) or the net liability after reversal (Rs. 30). The consensus points towards interest being calculated on the reversed ITC amount of Rs. 50, with the standard interest rate being 18%.

badrinarayanan

badrinarayanan (Querist)
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15 January 2021 Dear team/expert,

Please refer to below example regarding ITC reversal.

Particulars June 2020 Oct 2020
Output tax 100 0
Input tax 200 20
Net liability -100 -20
Reversal of ITC 0 50
Net liability -100 30

(Sorry about the alignment. I am not able to create table format.
Particulars represents text, June 2020 output tax is 100 and that of Oct is 0. and so on.)

In the above example, Kindly tell me when i reverse ITC in Oct month, whether interest is calculated on 50 or 30 ? Also specify the Interest rate.