Beware! Interest in GST is not in Public Interest!
Karneeti Part 272
Beware! Interest in GST is not in Public Interest!
CA Umesh Sharma
Arjun (Fictional Character): Krishna, What debate is undergoing on GST interest?
Krishna(Fictional Character): Arjuna, Under Sec 50, interest is levied in GST. Hyderabad GST Commissionerate has issued standing order on 4th February, 2019. It lead to argument between taxpayer and government.
Arjun: Krishna, When is interest levied under GST and who is liable to pay it?
Krishna: Arjuna,
- Every person who is liable to pay tax in accordance with the provisions 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.
2.A taxable person who makes an undue or excess claim of input tax credit under sub-section (10) of section 42 or undue or excess reduction in output tax liability under sub-section (10) of section 43, shall pay interest on such undue or excess claim or on such undue or excess reduction.
3.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.
Arjun: Krishna, What are rates for payment of interest?
Krishna: Arjuna,
- Every person who is liable to pay tax in accordance with the provisions but fails to pay such tax shall pay interest at such rate not exceeding 18 per cent.
- A taxable person who makes an undue or excess claim of input tax credit shall pay interest on such undue or excess claim, as the case may be, at such rate not exceeding 24 per cent.
Arjun: Krishna, What Hyderabad GST Commissionerate ordered and how debate actually started?
Krishna: Arjuna, As per guidelines of Hyderabad GST Commissionerate
For an example: If taxpayer files GST return for the month July 2018 in December 2018 and
1.If output liability is Rs. 1,00,000/- and ITC is 75,000/- but still taxpayer is liable to pay interest on Rs. 1,00,000/- and not on Rs, 25,000/-
2.If output liability is Rs. 50,000/- and ITC is 75,000/- but still taxpayer is liable to pay interest on Rs. 50,000/- though taxpayer has no output liability.
3.If output liability is nil and ITC is 75,000/-. Further taxpayer has wrongly claimed credit in previous return and reversed the same. The taxpayer is liable to pay interest on such reversal.
Arjun: Krishna,What should the taxpayer learn from this?
Krishna: Arjuna, There is debate going on the guidelines of Hyderabad GST Commissionerate. Government should not charge interest on output liability but should charge on net liability. The question haunting is that would GST lead to same suffering as it lead to in the times of moneylenders.
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