The Circular No. 192/04/2023-GST issued by the Central Board of Indirect Taxes & Customs (CBIC) provides clarification on the charging of interest under section 50(3) of the CGST Act, 2017, in cases of wrong availment of IGST credit and its subsequent reversal. The circular addresses concerns raised by trade regarding the utilization of wrongly availed IGST credit for interest calculation and the consideration of compensation cess credit.
Analysis: The circular clarifies that for the calculation of interest under rule 88B of the CGST Rules, the total input tax credit available in the electronic credit ledger, under the heads of IGST, CGST, and SGST taken together, needs to be considered. It emphasizes that the balance of input tax credit available under any of these heads can be utilized for interest calculation.
Regarding the credit of compensation cess available in the electronic credit ledger, the circular states that it cannot be taken into account for the purpose of calculating interest under sub-rule (3) of rule 88B of the CGST Rules. The credit of compensation cess is specific to the payment of compensation cess leviable on supplies and cannot be utilized for CGST, SGST, or IGST payments or credit reversals.
The CBIC requests suitable trade notices to be issued to publicize the contents of this circular, ensuring uniformity in the implementation of the provisions of the law across field formations.
Conclusion: Circular No. 192/04/2023-GST from the CBIC provides clarification on the charging of interest for wrong availment of IGST credit. It specifies that the total input tax credit available in the electronic credit ledger, including IGST, CGST, and SGST, should be considered for interest calculation. The circular also clarifies that the credit of compensation cess cannot be utilized for interest calculation purposes. Suitable trade notices are requested to disseminate the circular’s information effectively.
File No. CBIC-20001/5/2023-GST
Government of India
Ministry of Finance
Department of Revenue
Central Board of Indirect Taxes & Customs
GST Policy Wing
New Delhi,
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Circular No. 192/04/2023-GST | Dated: 17th July, 2023
To,
The Principal Chief Commissioners/ Chief Commissioners/ Principal Commissioners/ Commissioners of Central Tax (All)
The Principal Directors General/ Directors General (All)
Madam/Sir,
Subject: Clarification on charging of interest under section 50(3) of the CGST Act, 2017, in cases of wrong availment of IGST credit and reversal thereof.
References have been received from trade requesting for clarification regarding charging of interest under sub-section (3) of section 50 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as the “CGST Act”) in the cases where IGST credit has been wrongly availed by a registered person. Clarification is being sought as to whether such wrongly availed IGST credit would be considered to have been utilized for the purpose of charging of interest under sub-section (3) of section 50 of CGST Act, read with rule 88B of Central Goods and Services Tax Rules, 2017 (hereinafter referred to as the “CGST Rules”), in cases where though the available balance of IGST credit in the electronic credit ledger of the said registered person falls below the amount of such wrongly availed IGST credit, the total balance of input tax credit in the electronic credit ledger of the registered person under the heads of IGST, CGST and SGST taken together remains more than such wrongly availed IGST credit, at all times, till the time of reversal of the said wrongly availed IGST credit.
2. Issue has been examined and to ensure uniformity in the implementation of the provisions of law across the field formations, the Board, in exercise of its powers conferred by section 168 (1) of the CGST Act, hereby clarifies the issues as under:
| S. No. | Issue | Clarification |
| 1. | In the cases of wrong availment of IGST credit by a registered person and reversal thereof, for the calculation of interest under rule 88B of CGST Rules, whether the balance of input tax credit available in electronic credit ledger under the head of IGST only needs to be considered or total input tax credit available in electronic credit ledger, under the heads of IGST, CGST and SGST taken together, has to be considered. | Since the amount of input tax credit available in electronic credit ledger, under any of the heads of IGST, CGST or SGST, can be Rules. |
| 2. | Whether the credit of compensation cess available in electronic credit ledger shall be taken into account while considering the balance of electronic credit ledger for the purpose of calculation of interest under sub-rule (3) of rule 88B of CGST Rules in respect of wrongly availed and utilized IGST, CGST or SGST credit. | As per proviso to section 11 of Goods and Services Tax (Compensation to States) Act, 2017, input tax credit in respect of compensation cess on supply of goods and services leviable under section 8 of the said Act can be utilised only towards payment of compensation cess leviable on supply of goods and services. Thus, credit of compensation cess cannot be utilized for payment of any tax under CGST or SGST or IGST heads and/ or reversals of credit under the said heads.
Accordingly, credit of compensation cess available in electronic credit ledger cannot be taken into account while considering the balance of electronic credit ledger for the purpose of calculation of interest under sub-rule (3) of rule 88B of CGST Rules in respect of wrongly availed and utilized IGST, CGST or SGST credit. |
3. It is requested that suitable trade notices may be issued to publicize the contents of this Circular.
4. Difficulty, if any, in implementation of this Circular may please be brought to the notice of the Hindi version would follow.
(Sanjay Mangal)
Principal Commissioner (GST)
