ITC query

Department can demand interest on Input tax credit for the period of one month, for excess availment of credit. 

My view is 18% as per Section 50(1). 

Interest rate @ 24% as per Section 50(3) should be applied in case of excess claim of ITC as a result of mismatch i.e. under Sectio 42, 43.

Currently, matching provisions are not applicable. Hence, i am of the view that the interest rate shall be applied at the rate of 18% as per Section 50(1).

Correct me if my understanding is not correct.

Just beacuse the department people has issued letter (2A vs 3B) indicating it is excess claim of ITC it will not actually become excess availement of ITC. Unless, the receiver taken ITC without any document, goods or services.

Merely due to the fault of the supplier, the recipient shall not be penalised. 

Currently credit can be taken on provisional basis as per Section 41 of CGST Act. Once the matching provisions are implemented to say that the credit can be taken only after payment of tax by the supplier, then there is question of interest for excess availment of ITC.

AS PER SECTION 50 (3) CGST ACT : "A TAXABLE PERSON WHO MAKES AN UNDUE OR EXCESS CLAIM OF INPUT TAX"  :  RATE OF INTEREST IS 24%, (IT DOES NOT MEAN THAT  IF IT IS MISMATCH AS PER SEC-42, 43, CGST ACT ONLY, EVEN IF YOU HAVE CLAIM ITC UNDER SECTION 17(5) YOU ARE LIABLE DEPO INTT. @ 24%)

IF INPUT IS WRONGLY CLAIM : INTEREST RATE @ 24%

IF TAX IS PAID LATE OR FAIL TO TAX LIABLITIES ON TIME  : INTEREST RATE @ 18%