Notification on Payment of Interest on Net Liability on Late GST Payments

 

 

The Central Board of Indirect Taxes and Customs (CBIC) on 25^th August, 2020 via Notification No 63/2020 – Central Tax ^[1] notified that the interest on late GST payments will be applicable on net cash tax liability after the available input tax credits is utilized w.e.f. from 1st September 2020.

 

As per the notification, on exercising the powers the central governments wide sub section(2) Of section 1 of the Finance (No 2) Act, 2019 (23 of 2019) notifies 1^st September 2020 as the date on which provisions of Section 100 will come into force.

 

As per the Sec 100 of the Finance (No. 2) Act, 2019, a proviso will be added after the Section 50 of the CGST Act in Sub-section (1) which states that interest on late payment of GST which is declared in the return after the due date of payment of such tax will be levied only on the portion of tax which is paid by debiting the Electronic Cash Ledger.

 

This amendment in the law will bring a big sigh of relief for the tax payers. In simple words the notification states that the interest payment on delayed payment of GST would be applicable only on Net Cash Liability after the available Input Tax Credit is utilized.

 

-     Akash Girish Doshi

 

References

1: https://www.cbic.gov.in/resources//htdocs-cbec/gst/notfctn-63-central-tax-english-2020.pdf