19 January 2019
ONE OF OUR CLIENT HAS CLAIMED EXCESS CREDIT FOR THE MONTH OF APRIL AMOUNT RS.120000/- DUE TO CLERICAL MISTAKE NOW IT CAME TO OUR NOTICE SO I HAVE FOLLOWING QUESTION: 1) WHAT IS RATE OF INTEREST FOR REVERSAL? 2) WE HAVE CREDIT MORE THAN RS. 120000 THROUGH OUT APRIL TO DECEMBER DO WE NEED TO PAY INTEREST ? 3) WHAT IF WE HAD CREDIT RS 120000 TILL OCTOBER THAN WE UTILIZED SUCH AMOUNT AND PAID TAX LIABILITY USING SUCH AMOUNT.? PLEASE PROVIDE RELEVANT SECTION.
20 January 2019
In my view Rate of interest is 18% .
Your client need to reversed credit and also pay interest from @ 18% from Oct to the date of reversal of credit. Relevant provisions are :- Interest related provisions – Section 50 of the Act read with notification 13/2017 CGST dated 28.06.2017. • In terms of section 50(1) of the Act, where a person is liable to pay tax fails to pay the tax or any part within the period prescribed, interest payable at the rate of 18%. • • When recipient has made an excess or undue claim of ITC as per section 42(10) of the Act, rate of interest applicable will be 24%.
The higher rate of interest is applicable only in case of contravention of a certain provision of section 42 & 43 of the Act. Your client’s case does not falls under sec 42(10) .
CAclubindia
