CBIC has vide Notification No 14/2022- Central Tax dated 5th July, 2022 has issued the CGST (Amendment) Rules, 2022 vide which various amendments have been carried out in the CGST Rules, 2017. On of the major amendment in CGST Rules, is the insertion of new Rule 88B prescribing the manner of calculating interest on delayed payment of GST in the following three cases:
1. Delayed payment of tax due to late furnishing of returns:
As per Rule 88B(1) interest will be applicable in cases of delayed filing of return on portion of tax paid by debiting electronic cash ledger i.e. after availing input tax credit. The rate of interest applicable will be 18% p.a. (Section 50(1))
2. Delayed payment of tax due to other reasons:
In other cases where tax is payable, interest @ 18% p.a. will be applicable for due date of payment of such tax till the tax is actually paid. (Section 50(1))
3. Input Tax Credit (ITC) wrongly availed / utilised:
The interest shall be calculated on the amount of ITC wrongly availed and utilised, for the period starting from the date of utilisation of such wrongly availed ITC till the date of reversal of such credit or payment of tax in respect of such amount, @ 18% (Section 50(3))
ITC wrongly availed shall be construed to have been utilised, when the balance in the electronic credit ledger (ECL) falls below the amount of ITC wrongly availed, and the extent of such utilisation of ITC shall be the amount by which the balance in the ECL falls below the amount of ITC wrongly availed.
The date of utilisation of such ITC shall be taken to be, —
(a) the date, on which the return is due to be furnishing GSTR-3B or the actual date of filing of GSTR-3B, whichever is earlier, if the balance in the ECL falls below the amount of ITC wrongly availed, on account of payment of tax through the said return; or
(b) the date of debit in the ECL when the balance in the ECL falls below the amount of ITC wrongly availed, in all other cases.
For ready reference the new Rule 88B inserted in CGST Rules, 2017 is reproduced as under:
88B. Manner of calculating interest on delayed payment of tax.
(1) In case, where the supplies made during a tax period are declared by the registered person in the return for the said period and the said return is furnished after the due date in accordance with provisions of section 39, except where such return is furnished after commencement of any proceedings under section 73 or section 74 in respect of the said period, the interest on tax payable in respect of such supplies shall be calculated on the portion of tax which is paid by debiting the electronic cash ledger, for the period of delay in filing the said return beyond the due date, at such rate as may be notified under sub-section (1) of section 50.
(2) In all other cases, where interest is payable in accordance with sub section (1) of section 50, the interest shall be calculated on the amount of tax which remains unpaid, for the period starting from the date on which such tax was due to be paid till the date such tax is paid, at such rate as may be notified under sub-section (1) of section 50.
(3) In case, where interest is payable on the amount of input tax credit wrongly availed and utilised in accordance with sub-section (3) of section 50, the interest shall be calculated on the amount of input tax credit wrongly availed and utilised, for the period starting from the date of utilisation of such wrongly availed input tax credit till the date of reversal of such credit or payment of tax in respect of such amount, at such rate as may be notified under said sub-section (3) of section 50.
Explanation. —For the purposes of this sub-rule, —
(1) input tax credit wrongly availed shall be construed to have been utilised, when the balance in the
electronic credit ledger falls below the amount of input tax credit wrongly availed, and the extent of
such utilisation of input tax credit shall be the amount by which the balance in the electronic credit
ledger falls below the amount of input tax credit wrongly availed.
(2) the date of utilisation of such input tax credit shall be taken to be, —
(a) the date, on which the return is due to be furnished under section 39 or the actual date of filing of the said return, whichever is earlier, if the balance in the electronic credit ledger falls below the amount of input tax credit wrongly availed, on account of payment of tax through the said return; or
(b) the date of debit in the electronic credit ledger when the balance in the electronic credit ledger falls below the amount of input tax credit wrongly availed, in all other cases.
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Frah Saeed is a law graduate specializing in the core field of indirect taxes and is the Co-founder of taxwallah.com. She has authored many publications on GST and is into full-time consultancy on GST to big corporates. She as a part of taxwallah.com heads a team comprising of Chartered Accountants and Advocates and plays a key role in our mission to disseminate GST knowledge to all.
