Interest Provisions under GST

Posted Date : 12-Jul-2017 , 03:49:59 pm | Posted By CASANSAAR print

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In exercise of the powers conferred by sub-sections (1) and (3) of section 50, sub-section (12) of section 54 and section 56 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on the recommendations of the Council, hereby issued Notification No. 13/2017 – Central Tax, 28th June, 2017 fixes the rate of interest per annum.

Summary Table

S. No.	Section	Relates to	Rate of interest (%)
1	Sub-section (1) of section 50	Interest on delayed payment of tax.	18
2	Sub-section (3) of section 50	Interest on undue or excess claim of input tax credit or undue or excess reduction in output tax liability.	24
3	Sub-section (12) of section 54	Interest on withhold refund: When an order giving rise to a refund is the subject matter of an appeal or further proceedings or where any other proceedings under this Act is pending and the commissioner withhold the refund till such time as he may determine.	6
4	Section 56	Interest is not granted within sixty days from the date of receipt of application after tax ordered to be refunded by proper officer.	6
5	Proviso to section 56	Interest is not granted within sixty days from the date of receipt of application consequent to order passed by an adjudicating authority or Appellate Authority or Appellate Tribunal or court.	9

Detailed Provisions

Interest on delayed payment of tax:

As per the provisions of Section 50(1), every person who is liable to pay tax in accordance with the provisions of this Act or the rules made there under, but fails to pay the tax or any part thereof to the Government within the period prescribed, shall pay interest at the rate of 18 percent per annum for the period for which the tax or any part thereof remains unpaid.

Period for which interest to be paid shall be calculated from the day succeeding the day on which such tax was due to be paid to the date of payment to the credit of the Government.

Interest on undue or excess claim of input tax credit or undue or excess reduction in output tax liability:

As per the provisions of Section 50(3), a taxable person who makes an undue or excess claim of input tax credit or undue or excess reduction in output tax liability shall pay interest on such undue or excess claim or on such undue or excess reduction, as the case may be, at the rate of 24 percent per annum.

Interest on delayed refund:

If any tax ordered to be refunded by proper officer to any applicant is not refunded within sixty days from the date of receipt of application filed by the applicant then interest shall be paid at the rate of 6 percent.

Interest shall be payable in respect of such refund from the date immediately after the expiry of sixty days from the date of receipt of application under the said sub-section till the date of refund of such tax.

Further, where any claim of refund arises from an order passed by an adjudicating authority or Appellate Authority or Appellate Tribunal or court which has attained finality and the same is not refunded within sixty days from the date of receipt of application filed consequent to such order, interest at the rate of 9 percent.

Interest shall be payable in respect of such refund from the date immediately after the expiry of sixty days from the date of receipt of application filed consequent to such order till the date of refund.

Interest on withhold refund:

As per the provisions of Section 54(11) & 12, where an order giving rise to a refund is the subject matter of an appeal or further proceedings or where any other proceedings under this Act is pending and the Commissioner is of the opinion that grant of such refund is likely to adversely affect the revenue in the said appeal or other proceedings on account of malfeasance or fraud committed, he may, after giving the taxable person an opportunity of being heard, withhold the refund till such time as he may determine.

Where a refund is withheld, the taxable person shall be entitled to interest at the rate of 6 percent per annum.

The author is a member of the ICAI and may be contacted at ca.prabhashchoudhary@gmail.com

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