Interest on Late Payment of GST – Notification no 63/2020
It is well settled position of law by virtue of section 50 of CGST Act, 2017 that Every person who is liable to pay tax in accordance with the provisions of this Act or the rules made thereunder, but fails to pay the tax or any part thereof to the Government within the time period prescribed by government, then person shall for the period for which the tax or any part thereof remains unpaid i.e. from due date of payment till date of payment, pay on his self-assessment basis, interest at such rate of 18% (p.a.).
But now government vide notification dt 25th August, 2020; determined that proviso to section 50(1) shall be added and said proviso prescribes Interest on GST was previously charged on gross liability i.e. if assessee is liable to pay Rs. 100/- as tax and he has used Input tax credit of Rs. 80/-; in that case also assessee is liable to pay the interest on gross liability i.e. Rs.100/- but now government has clarified that interest from prospective basis will be levied on net liability.
After government issued the notification after this it started controversy that whether such amendment will take prospective effect i.e. from 01-09-2020 or it will take effect from 01-07-2017 putting all the controversy’s aside government today notified that such amendment will take effect prospectively i.e. from 01-09-2020 due to technical issues. Further government also ensured that no future recoveries will be carried out in this respect and department will not issue any notice for recovery of past period.