Article explains Calculation of Interest on GST liability  in following situations-

1. Reduction in GST liability reported in GSTR 1 but correspondingly not reported by the recipient and discrepancy is not rectified by the supplier;

2. Any reduction in output tax liability that is found to be on account of duplication of claims;

3. Failure to pay the tax or any part thereof to the Government within the period prescribed;

4. Undue or excess claim of input tax credit under sub-section (10) of section 42

5. Undue or excess reduction in output tax liability under sub-section (10) of section 43

6. Reversal  of  input  tax  credit  in  the  case  of  non-payment  of  consideration

(Please note that the interest shall be calculated w.e.f. the date of claiming the credit and not from the expiry of 6 months)

7. Inputs  or  capital  goods  are  not  returned  to  the  principal  within 1 year or 3 years respectively by the Job worker

8. Incorrect availment or utilisation of input tax credit

9. Any other defaults for short payment/non payment or erroneously refunded

Table showing Calculation of Interest on Liability of GST

S. N. Situation Rate of Interest Period Relevant provisions
1 Reduction in GST liability reported in GSTR 1 but correspondingly not reported by the recipient and discrepancy is not rectified by the supplier; 18% From the date of availing of credit till the corresponding additions are made under the said sub-sections. Section 43(5) and (8) read with section 50(1) of CGST Act, 2017
2 Any reduction in output tax liability that is found to be on account of duplication of claims; Section 43(6) and (8) read with section 50(1) of CGST Act, 2017
3 Failure to pay the tax or any part thereof to the Government within the period prescribed; For the period for which the tax or any part thereof remains unpaid; Section 50(1) of CGST Act, 2017
4 Undue or excess claim of input tax credit under sub-section (10) of section 42 24% Section 50(3) of CGST Act, 2017

 

 

5 Undue or excess reduction in output tax liability under sub-section (10) of section 43
6 Reversal  of  input  tax  credit  in  the  case  of  non-payment  of  consideration

(Please note that the interest shall be calculated w.e.f. the date of claiming the credit and not from the expiry of 6 months)

18% The period starting from the date of availing credit on such supplies till the date when the amount added to the output tax liability Rule 37(2) and (3) of CGST Rules, 2017
7 Inputs  or  capital  goods  are  not  returned  to  the  principal  within 1 year or 3 years respectively by the Job worker 18% From the date of delivery challan issued to the Job worker by the Principal till the date of reporting in output liability Rule 45 of CGST Rules, 2017
8 Incorrect availment or utilisation of input tax credit 18% For the period of default Section 73 of CGST Act, 2017
9 Any other defaults for short payment/non payment or erroneously refunded 18% For the period of default Section 50 of CGST Act, 2017

(Authors – CA Neeraj Kumar and CA Deepak Arya, RAPG & Co. Chartered Accountants from Delhi and can be reached at info@rapg.in, 9999836182/9818449179)

 

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