Interest will be charged on net delayed GST payments

Providing a sigh of relief to the industry on the issue of interest levied on delayed GST payment, the government has clarified that the decision to charge interest on net tax liability will be implemented retrospectively from July 1, 2017.

The show-cause notices issued in this respect also have been kept in the call book till the CGST Act is amended.

Charging interest on the unpaid gross tax liability has been a contentious issue, which was also dragged to the courts.

The industry had protested the government move to recover `46,000 crore as unpaid interest from the taxpayers.

However, recently the Central Board of Indirect Taxes and Customs (CBIC) notified that from September 1, 2020 interest would be charged on net tax liability and not on gross tax liability and decided to forego `46,000 crore.

Still the issue did not resolve completely as CBIC said that the notification has been issued prospectively due to certain technical limitations while the 39th GST Council meeting in March had decided that the amendment will be effective from July 1, 2017 and law would be amended retrospectively.

On September 18, CBIC issued another notification, which brought in much needed clarity in the issue.

The indirect tax agency said that for the period between July 1, 2017 and August 30, 2020, the interest on the net tax liability only will be recovered.

Further, the show-cause notices issued on gross tax payable will be kept in Call Book till the retrospective amendment in the Section 50 of the CGST Act is carried out.