According to section 50 of GST, if there is delayed payment in GST payment then interest @18% will be required to be paid also if there is any wrong or excess claim of Input Tax Credit (ITC) then interest @ 24% will be required to paid. However some taxpayers are paid the interest either Su-moto or Demand if any received from the GST officers.

According to recent news various State Governments are now taken the strict action against the Interest Defaulters

  • In GST, there is a requirement to pay interest if there is late payment or wrong availment of Input Tax Credit etc. We found that, if no interest is paid under GST then no notice or proceeding has been initiated till date But recently, the Central GST Department has decided to use their power and take measures to recover interest amount from the defaulters under section 50 of the Central Goods and Services Tax Act, 2017 including recovery of properties etc.
  • A standing order passed by the Hyderabad Commissionerate has pointed out a number of irregularities namely in connection with the non-payment of interest for delay in payment of self-assessed tax in every case of the delayed filing of GST-return.
  • The order said that “The irregularities are against the provisions of the GST law and need to be taken the action on priority. Hence, prompt action for recovery of interest, as per the law, is warranted.
  • “The order further said that since ITC/Credit in balance in the ‘Electronic Credit Ledger’ cannot be treated as the Tax paid, unless it is debited in the said credit ledger while filing the return for off-setting the amount in the ‘Liability Ledger’, the interest liability under Section 50 is mandatorily attracted on the entire Tax remained unpaid beyond the due date prescribed.
  • Also In a recent communication, the State GST department, Kerala has intimated that the dealers who did not file GSTR 3B will start getting notices after 1st week of January 2019. A notice issued by the department on 20th December stated that there will be strong actions against the defaulters in view of the fact that there is a large number of non-filers even after the completion of one year of GST rollout.
  • Also officers can invoked the section 125 of CGST Act, According to Section, Any person, who contravenes any of the provisions of this Act or any rules made there under for which no penalty is separately provided for in this Act, shall be liable to a penalty which may extend to twenty-five thousand rupees.
  • The ITC in the balance as on the due date for filing the return has no relevance with regard to the interest liability u/Sec.50. It is immaterial whether the self-assessed tax is paid through the Credit/ITC or the Cash. Once the payment is beyond the prescribed date, interest liability is attracted to the entire Tax amount.
  • “It is pertinent to mention that the amount of the interest payable in terms of the Sec. 50, would automatically become a recoverable arrear, which needs to be recovered in terms of the Sec. 79 of CGSTA/SGSTA,” the Order said.
  • In view of the above observations, the Order given certain instructions to the officers including conducting due verification of all the cases of belated filing of returns, to initiate recovery proceedings in case of default in interest payment and to maintain a register in order to keep track of the cases which shall be updated on regular basis with proper abstract.