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Interest on Excess Credit

K Jaya Durga Devi (Student CA Final ) (77 Points)

22 June 2020

We have taken excess ITC in 3B. What should be the interest rate on the excess amount of ITC? Whether 24 or 18%?

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12 Replies

David (article Assistant) (1621 Points)
Replied 22 June 2020

Hlo, In case of excess claim it will be 24%

K Jaya Durga Devi (Student CA Final ) (77 Points)
Replied 22 June 2020

In case we have invoice but party fails to file gstr1, then what is the rate?

PADMANABHAN K K (CA) (364 Points)
Replied 22 June 2020

It will be 18%

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K Jaya Durga Devi (Student CA Final ) (77 Points)
Replied 22 June 2020

Thank you

RAJA P M ("Do the Right Thing...!!!") (127167 Points)
Replied 22 June 2020

In case we have invoice but party fails to file gstr1, then what is the rate?

- It's also 24% as excess claim.

David (article Assistant) (1621 Points)
Replied 22 June 2020

In case we have bill, interest will be 18% only. Because we are eligible to claim.. Only because of fault by the party, it become ineligle..

RAJA P M ("Do the Right Thing...!!!") (127167 Points)
Replied 22 June 2020

Can You give details for Your view...? @ Mr David...

CA Surjeet Negi (Indirect Tax- Consultant) (50 Points)
Replied 22 June 2020

As per section 50(3) read with section 42(10) cgst act, when recipient has made an excess or undue claim of ITC , rate of interest applicable will be 24%

Rajkumar Patel (602 Points)
Replied 22 June 2020

You donot need to pay interest on itc claimed because you have proof to claim itc. It is mistake of party to not filing Return. if any query will be raised on you, you can justify your genuineness on basis of that invoice.

K Jaya Durga Devi (Student CA Final ) (77 Points)
Replied 22 June 2020

What if we utilise the excess credit taken?

Pankaj Rawat (GST Practitioner) (55032 Points)
Replied 23 June 2020

The interest rate is 24% (refer Section 50 of CGST Act)

David (article Assistant) (1621 Points)
Replied 23 June 2020

Hlo Sir,
In my opinion, Excess credit only arise when we claim ITC more than from which is shown in invoice. If a there is ITC of Rs. 100 in a invoice ,if we claim 150, then there arise excess claim... So 24% will applicable.... Here In this case Invoice amount and claimed amount are same. Only because of the supplier default in payment, it become ineligle... So 18% only applicable.
Any discrepancy arises either due to supplier fails to provide details of such supply in his return will be communicated to both supplier and recipient and If the discrepancy is not rectified, the ITC needs to be reversed along with interest @ 18% as per section 50(1).

If the supplier declares details of such supply in his return filed within the prescribed time limit, the recipient can reduce the amount so added in his output tax liability and the interest paid also shall be refunded.

Further, According to provision of sec 42 (10) of CGST Act,in case, the unmatched credit is availed back by the recipient,he shall be liable to pay interest @ 24% on such amount of unmatched credit. The chargeability of rate of interest has been provided in sec 50(3) of the CGST Act..