Interest on delayed payment of GST

In this article we discuss about the concept of interest liability under GST. So, interest shall be payable if GST liability not paid within the due date or excess or undue ITC claimed.

As per section 50 of CGST Act, 2017

Interest on delayed payment of tax:-

1. Every person who is liable to pay tax in accordance with the provision of this Act or the rules made thereunder, but fails to pay the tax or any part thereof to the Government within the period prescribed, shall for the period for which the tax or any part thereof remains unpaid, pay, on his own, interest at such rate, not exceeding eighteen per cent, as may be notified by the Government on the recommendations of the Council.
2. The interest under sub-section (1) shall be calculated, in such manner as may be prescribed, from the day succeeding the day on which such tax was due to be paid.

Summary [Section 50(1) &(2)]

1. As per this section every supplier is liable to pay interest on delayed payment tax due.
2. Interest rate cannot exceed 18%.
3. The interest shall be calculated from the day succeeding the day such tax was due to be paid to till the date of payment. Like due date of filling of GSTR-3B return along with tax is 20^thday of next month.
4. Example:-

Particulars
GST payable for the month of April 2019	Rs. 2,00,000
Due date of filling of GSTR-3B return for the month of April 2019	20-05-2019
Due date of payment of GST for the month of April 2019	20-05-2019
Actual date of payment of GST for the month of April 2019	01-06-2019
Rate of Interest	18%
In the above case, the amount of interest on delayed payment of tax shall be computed as under Interest ( Rs. 200000*18%*12 days i.e. from 21.05.2019 to 01.06.2019)	Rs. 1,183

 

3. Any taxable person who makes an undue or excess claim of input tax credit under sub-section (10) of section 42 or undue or excess claim or on such undue or excess reduction, as the case may be, at such rate not exceeding twenty four per cent, as may be notified by the Government on the recommendations of the Council.

Summary [Section 50(3)]

1. Every supplier is liable to pay interest on ITC has been claimed in excess or where it was not eligible to be claimed.
2. Interest rate cannot exceed 24%.