The Central Board of Indirect Taxes and Customs (CBIC), as part of the 6 years GST celebration has clarified that “Pay Interest only if wrongly availed ITC is utilised”. The CBIC, through this made the clarification on the payment of the interest.
It was stated that taxpayers who wrongly avail Input Tax Credit (ITC) are not liable for interest until they utilise the same for the payment of GST liability. Also mentioned that a decision from retrospective date 1.07.2017 has been taken to provide the relief to the taxpayers where interest has to be paid from the day when it has been wrongly availed.
Also, the rate of interest on wrongly availed and utilised ITC has been reduced to 18% from 24% with effect from 1.07.2017.
A retrospective amendment to Section 50 of the Central Goods and Services Tax Act, 2017 (CGST), effective from 1st July 2017. This amendment, introduced through the Finance Act, 2022 and notified via Notification No. 09/2022-Central Tax on 5th July 2022, states that interest is applicable on incorrectly claimed Input Tax Credit (ITC) only when it has been both claimed and utilized.
Furthermore, the CGST Rules, 2017 have been amended through Notification No. 14/2022-Central Tax on 5th July 2022 to provide guidelines for calculating interest under Section 50 of the CGST Act.
Also, the Retrospective amendment has been made in Section 50 of CGST Act, 2017, with effect from 01.07.2017 to provide for payment of interest on the delayed payment of tax on net cash basis. This will facilitate the taxpayers and help in removing ambiguity and disputes regarding payment of interest on gross tax basis or net cash basis.
Another update by the GST is that it has reduced the frequency of filing Form GST ITC-04. presently, taxpayers are required to file FORM GST ITC-04, on quarterly basis, containing details of all goods sent to job worker and received from job worker.
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