Delayed GST fee: Interest to be charged on web tax legal responsibility from Sept 1

New Delhi, August 26

The authorities has mentioned curiosity on delayed fee of products and providers tax (GST) shall be charged on web tax legal responsibility with impact from September 1.

The trade had earlier this yr raised concern over the directive of restoration of about Rs 46,000 crore of unpaid curiosity on delayed GST fee. The curiosity was charged on gross tax legal responsibility.

The GST Council, comprising centre and state finance ministers, in its 39th assembly in March had determined that curiosity for delay in fee of GST shall be charged on web tax legal responsibility with impact from July 1, 2017, and legislation could be amended retrospectively.

However, the Central Board of Indirect Taxes and Customs (CBIC) on August 25, notified September 1, 2020, because the date from which curiosity could be charged on web tax legal responsibility.

In an announcement the CBIC later clarified that the Notification referring to curiosity on delayed fee of GST has been issued prospectively as a consequence of sure technical limitations.

“However, it has assured that no recoveries shall be made for the past period as well by the Central and State tax administration in accordance with the decision taken in the 39th Meeting of GST Council. This will ensure full relief to the taxpayers as decided by the GST Council,” the assertion added.

AMRG & Associates Senior Partner Rajat Mohan mentioned potential availability of this profit would imply that tens of millions of taxpayers could also be taking a look at demand of curiosity for over three years from the date of GST implementation.

“Businesses are expected to approach the High Courts again on this unjustified and illegal demand of interest basis the ‘principle of estoppel’,” Mohan mentioned.

The CBIC had earlier mentioned that GST legislation permits curiosity calculation on delayed GST fee on the premise of gross tax legal responsibility. This place has been upheld within the Telangana High Court’s choice dated April 18, 2019.

Net GST legal responsibility is arrived at after deducting enter tax credit score from gross GST legal responsibility.

Hence, calculating curiosity on gross GST legal responsibility will increase the payout burden on companies.

EY Tax Partner Abhishek Jain mentioned “the retrospective notification becomes all the more imperative to subside multiple notices which were issued by the revenue authorities demanding GST on gross liability”.

Businesses, apart from these beneath the composition scheme and quarterly return filers, registered beneath items and providers tax (GST) must file returns (GSTR-1) exhibiting tax legal responsibility by 11th of following month and pay taxes by submitting GSTR-3B between 20th-24th (due date varies in keeping with the state wherein companies are registered).

There have been instances the place GST assessees have paid taxes after due date however didn’t pay the curiosity due on account of delayed fee.

There have been doubts on whether or not the curiosity was to be paid on gross tax legal responsibility or web tax legal responsibility. Interest on the fee of 18 per cent is levied on delayed tax fee. — PTI

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