Big relief for GST taxpayers! Interest on delayed payment to be charged only on net tax liability

Senior journalist Krishnanand Tripathi, in this article, writes that it will be a big relief for GST payers as interest on delayed payment will be charged only on net tax liability. Following the protests from GST payers, the GST Council has decided to amend the law retrospectively to cover all the cases since the implementation of GST in August 2017.

New Delhi: In a big relief for millions of GST registered business across the country, the GST Council has decided that GST payers will only need to pay interest on the net tax liability for any delay in payment of GST by them. As per the existing mechanism, the CBIC was sending notices for payment of interest on the gross tax liability if there was any delay in payment of GST to the government.

“The law will be amended retrospectively,” the finance ministry said in a statement after a meeting of GST Council in New Delhi.

The amended law will cover all the cases of levy of interest for delayed payment of GST since the implementation of a common nationwide goods and services tax in the country in July 2017.

“It will be a big relief for GST payers who were asked to pay Rs 46,000 crore as interest for delayed GST payments,” said Pritam Mahure, a Pune based chartered accountant, specializing in GST related matters.

He said it was unfair on the part of tax authorities to send notices to GST payers demanding interest on the gross tax liability even if a taxpayer’s net tax liability was low due to an input tax credit (ITC) available to him.

“Earlier, if a GST payer’s gross tax liability was assessed at Rs 1 crore, and he had input tax credit of Rs 90 lakh available with him, then as per the law his net tax liability was just Rs 10 lakh, however, the tax authorities were sending notices and demanding interest on the gross tax liability of Rs 1 crore, in cases of a delayed payment of GST,” Pritam Mahure told ETV Bharat.

He said it was unfair from the beginning to demand interest on the gross tax liability without taking into the account input tax credit available to a taxpayer.

“Now it’s good that they are correcting it since the beginning. It has been delayed but it's good that finally the government has acknowledged the problem and correcting it,” he said.

More relief to GST payers

The GST Council also extended the time to make an application for revocation of cancellation of GST registration. Now those GST registered businesses whose registration was cancelled because of non-compliance or any other reasons can make an application for revocation of cancellation by the end of June this year.

In yet another relief to the SME sector, the due date for filing of annual return and reconciliation statement in GSTR-9C form for FY 2018-19 has been extended till June 30 this year.

The government has also waived off the late fee for delayed filing of annual returns and reconciliation statement for FY 2017-18 and 2018-19 for small businesses having an aggregate turnover of less than Rs 2 crore in a year.