Section 73 and74

can we pay penalty of u/s 73 &74 by credit ledger.
Replies (3)
Quick Summary
This discussion clarifies whether penalties under Sections 73 and 74 of the CGST Act can be paid using the electronic credit ledger. Generally, the credit ledger is for 'output tax' only, meaning penalties must be paid from the cash ledger. However, recent amendments offer an option where if you pay the ascertained tax and interest promptly in response to a Section 74(5) notice, you may only need to pay a reduced penalty.

As per section 49(4) of the CGST Act, the amount available in the Electronic Credit Ledger can be used toake payment of 'output tax' only.
Hence, 'penalty' cannot be paid by credit ledger.
Penalty can be paid only from cash ledger

However, due to amendment in the rule it is optional. Thus,if in response to such intimation u/s 74 (5) person pays such ascertained tax and interest, then he will required to pay penalty equivalent to 15 % of the such tax in fraud case. And no penalty is payable under section 73 (5) for normal case.

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