ITC Reversal delayed payment.

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accountant
450 Points Joined July 2013
We purchased machinery from Germany on FY 19-20 25 Sept 2019 from an import supplier & same year taken IGST Amount Rs.4800000 benefit but payment made to supplier in FY 19-20 Sept 2019 40% Oct 21 30% Oct 22 30% as per PO terms.

in that case can we pay interest on the GST amount under late payment to Govt.(over 180 Days)
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On 20 October 2024 at 13:42 Report
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Master in Accounts & high court Advocate
8756 Points Joined December 2011

You imported machinery from Germany in September 2019 and availed IGST credit of Rs. 4,800,000.

However, you made payments to the supplier in installments over three financial years (FY 19-20, FY 20-21, and FY 21-22).

As per the GST law, interest is payable on delayed payment of tax (including IGST) if the payment is made beyond 180 days from the date of invoice or the date of receipt of goods, whichever is earlier.

In your case, since you availed IGST credit in September 2019 and made payments to the supplier in installments beyond 180 days, you may be liable to pay interest on the IGST amount to the government.

To calculate the interest, you need to determine the period of delay:

1. Calculate the date from which interest is payable (i.e., 180 days from the date of invoice or receipt of goods).

2. Determine the amount of IGST credit availed (Rs. 4,800,000).

3. Calculate the interest rate applicable (currently 18% per annum).

You can use the following formula to calculate the interest: Interest = (IGST Amount x Interest Rate x Period of Delay) / 100

 you may want to explore the possibility of waiver or reduction of interest under certain circumstances, such as genuine reasons for delay or applicability of specific notifications or circulars. 

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On 20 October 2024 at 16:23
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accountant
450 Points Joined July 2013
Both parties agreed for Payment Terms before the transaction happened.
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On 20 October 2024 at 18:36


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