NEW DELHI: The government has stated that interest on the deferred payment of the Goods and Services Tax (GST) will be charged on the net tax payable as of September 1.
The industry had raised concerns earlier this year over the recovery directive of around Rs 46,000 crore of unpaid interest on the late payment of the GST. Interest was charged against gross tax payable.
The GST Council, made up of central and state finance ministers, at its 39th meeting in March, decided that interest for late payment of the GST would be charged on the net tax payable from July 1. 2017, and the law would be amended retroactively.
However, the Central Council of Indirect Taxes and Customs (CBIC) notified August 25, 2020 to September 1, 2020 as of the date from which interest would be charged on the net tax payable.
AMRG & Associates senior partner Rajat Mohan said this notification appears to contradict GST Board rulings in which taxpayers were assured that said benefit would be available retroactively from July 1, 2017. .
“The potential availability of this benefit would mean that millions of taxpayers could consider interest claims for more than 3 years from the date of GST implementation. principle of estoppel ‘”, said Mohan.
The CBIC had previously stated that the GST law allows the calculation of interest on the deferred payment of GST on the basis of gross tax payable. This position was confirmed in the decision of the high court of Telangana dated April 18, 2019.
The net GST payable is calculated after deducting the input tax credit from the gross GST payable.
As a result, calculating interest on GST payable increases the burden of payment on businesses.
EY’s tax partner, Abhishek Jain, said that with the GST Council having approved a retrospective change to applicable interest on net debt, companies would now wait for a retrospective limitation for it.
“Retrospective notification becomes all the more imperative to appease the multiple opinions issued by tax authorities requiring GST on gross liability,” Jain added.
Companies, other than those falling under the composition regime and declarants of quarterly declarations, registered under the goods and services tax (GST) must file declarations (GSTR-1) indicating the tax liability in the no later than the 11th of the following month and pay taxes by filing GSTR-3B between the 20th-24th (the due date varies depending on the state in which the businesses are registered).
There have been instances where GST taxpayers have paid taxes after the due date but have not paid interest due due to late payment.
There were doubts as to whether interest should be paid on gross tax or net tax. Interest at the rate of 18 per cent is levied on late payment of tax.
To concern Deferred payment of GST: interest to be charged on net tax payable as of September 1

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