Govt may introduce differential rates for delayed GST payment

NEWDELHI: The government may levy differential rates of interest on taxpayers for delayed payment of Goods and Services tax (GST) in an attempt to prod businesses to pay their taxes on time and to boost revenue collection, two officials said.

The interest levied could be 18% for the first three months and 24% thereafter. The government will charge the interest on the net GST amount and not on the gross amount as has been the case so far, said the officials cited above, requesting anonymity. Taxpayers have so far been paying interest on the full amount without adjusting for the input tax credit.under the existing law, late payment of tax attracts a flat rate of 18% interest.

The proposal to levy a differential rate of interest has been referred to the Law Committee of the GST Council before it is considered by the Council, which oversees the indirect tax regime introduced in July 2017. The decision on charging interest on net amount of GST has been taken already and the law has been amended accordingly. The amendment will be notified soon, the officials said.

The Law Committee has an advisory body, which has about two dozen members, mainly tax officials representing the Centre and states.email queries sent to the Central Board of Indirect Taxes and Customs (CBIC) and the Union finance ministry did not elicit any responses.

The proposed move is aimed at prodding businesses to pay tax on time and to boost revenue collection, officials said. Goods and