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Interest if Output Tax is less than Input

09 October 2019

A person has not filed returns for 6 months. The ITC amount is grater than Output every month. whether any interest applicable ?

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9 Replies

RAJA P M ("Do the Right Thing...!!!") (127146 Points)
Replied 09 October 2019

Yes.... interest is applicable if return not filed on or before due date.

CA Dhruva Kalamanji (Chartered Accountant ) (1996 Points)
Replied 09 October 2019

Interest is not applicable however late filling fees is applicable. further any input till march 19 should be availed before 20th of October. failing to avail such input will automatically amounts to lapse of input and consequently interest is applicable on output tax liability

1 Like

Pankaj Mannan (9 Points)
Replied 09 October 2019

Any section or notification in reponse to your reply

CA Dhruva Kalamanji (Chartered Accountant ) (1996 Points)
Replied 09 October 2019

Hi Pankaj

this is the new amendment taken in 31st GST council meeting

The 31st GST Council meeting recommended changing this Law to provide that only the net liability of a taxpayer would hereafter be subjected to interest. This amendment to the Central Goods and Services Tax Act, was presented under the Finance Bill, 2019. Under this new amendment governing section 50 of the Act, interest will now be charged on only that portion of the GST liability which is paid by debiting the electronic cash ledger
The amendment to section 50 was proposed in the Union Budget on the July 5, 2019, and the Finance Bill 2019 was passed in the Lok Sabha on the July 18, 2019.

Pankaj Mannan (9 Points)
Replied 09 October 2019

Whether proviso to sec 50 applicable if GST number had been cancelled by Tax officer ?

CA Dhruva Kalamanji (Chartered Accountant ) (1996 Points)
Replied 09 October 2019

Here is the extarct of section 50

Interest on delayed payment of tax
(1) Every person who is liable to pay tax in accordance with the provisions of this Act or the
rules made thereunder, but fails to pay the tax or any part thereof to the Government
within the period prescribed, shall for the period for which the tax or any part thereof
remains unpaid, pay, on his own, interest at such rate, not exceeding eighteen
per cent., as may be notified by the Government on the recommendations of the
Council.
(2) The interest under sub-section (1) shall be calculated, in such manner as may be
prescribed, from the day succeeding the day on which such tax was due to be paid.
(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.

there is no proviso here. kindly send me proviso that you are quoting here.

you can write to me at sthayin @ gmail.

Pankaj Mannan (9 Points)
Replied 09 October 2019

Provided that the interest on tax payable in respect of supplies made during a tax period and declared in the return for the said period furnished after the due date in accordance with the provisions of section 39, except where such return is furnished after commencement of any proceedings under section 73 or section 74 in respect of the said period, shall be levied on that portion of the tax that is paid by debiting the electronic cash ledger

CA Dhruva Kalamanji (Chartered Accountant ) (1996 Points)
Replied 09 October 2019

Hi pankaj

if cancellation of registration pursuant to suo mto cancellation as state in 29(2) then no issue. sec 50 benefit is available.

if cancellation is pursuant to sec 73 or 74 audit and enquiry then sec 50 benefit is not available.
interest is on gross output liability.

i hope in your case registration is cancelled due to non filing of return for 6 months. so in this case ammended section 50 benefit is available