Festive Savings Are Here. Get 10% OFF on All CCI Pro Plans. Subscribe Now!

CAN ITC BE CLAIMED ON INTEREST CHARGED ON DELAYED PAYMENT OF INVOICES BY VENDOR

1259 views

Save Share

Rushi Jain

24 Points Posted on 13 April 2024

Hi, I want to know if ITC can be claimed by recipient on interest charged on delayed payment of invoices by supplier . i cant find any circular or ruling for the same .. if anyone has any notification please share the details .

eg. if a recipient pays after a certain due date, interest is charged for the same and as we know gst is applicable , and such interest becomes part of value of supply so can i as a recipient claim gst on it .

I have asked this question as one gst Officer says that itc cannot be claimed on such interest , and has asked to prove this point if we want to claim it

Replies (5)

Quick Summary

This discussion explores whether Input Tax Credit (ITC) can be claimed on the GST component of interest charged by a vendor for delayed invoice payments. While GST is applicable to such interest as it forms part of the supply value, there's debate on whether the recipient can claim ITC on this. One GST officer stated it's not claimable, prompting a search for official clarification or rulings on this specific scenario.

sabyasachi mukherjee

Profession

19978 Points Posted on 14 April 2024

No input tax credit cannot be claimed

CA Raj Doshi

Practising CA

5649 Points Posted on 14 April 2024

It's clear that gst is charged on interest for delayed payment where the interest becomes party of value of supply. For ITC, no where ITC is blocked in such scenario. So it's available. You may quote section 17 where there is no mention of the same being blocked

Rushi Jain

24 Points Posted on 15 April 2024

why can it be not claimed ?

Bradley Earnest

26 Points Posted on 16 April 2024

I don't know

geometry dash breeze

Aashok Kumar Sharma

Finance/Compliance Consultant

75675 Points Posted on 07 November 2026

Yes, if GST is properly charged:

• Interest or late fee charged for delayed payment of consideration is part of the value of supply (Sec 15(2)(d)), taxed at the rate of the principal supply. The supplier issues a debit note or invoice with GST.

• For the recipient, that GST is input tax on a supply used in business, so ITC is available (Sec 16), subject to the usual conditions (document, 2B, payment within 180 days). No provision blocks ITC on such interest.

• If the supplier charges interest without GST (it should be with GST), there's no ITC to claim.

• Different from interest on a loan or deposit (exempt service, Notf 12/2017 Sl. 27), where there's no GST.