Section 50 of CGST Act, 2017 Interest on Delayed Payment of Tax

Section 50 of CGST Act

You are responsible for paying interest on late payment of GST tax. Section 50 of CGST Act deal with the provisions regarding the payable interest on delayed payment of tax. The types of interest which a taxable person is liable to pay under this section are as follows:

Section 50 of CGST Act, 2017-Interest on Delayed Payment of Tax

Section 50 of CGST Act

  1. Interest on delayed payment of tax: Any person who is responsible for paying tax as per the provisions of this act or the rules made thereunder, fails to pay the tax or any part thereof to the government, within the period prescribed, shall for the period for which the tax or any part thereof remains unpaid, pay, on his own, interest at such rate, not exceeding eighteen percent, as may be notified by the government on the recommendation of the council
    The interest under sub-section (1) shall be calculated in such a manner as may be prescribed, from the day succeeding the day on which such tax was due paid.
  2. Undue or excess claim of input tax credit U/S 42 (10) & Undue or excess reduction in output tax liability U/S 43(10): A taxable person who executes an undue or excess claim of input credit under section 42 (10) or undue or excess reduction in output tax liability under section 43 (10), shall pay interest on such undue or excess claim or on such undue or excess reduction, as the case may be, at such rate not exceeding twenty-four percent, as may be notified by the government on the recommendation of the council.

Rate of Interest

The government has fixed the rate of interest on the recommendations of the council as mentioned below:

Section

Particulars

Rate

50 (1)

Delay in payment of tax, in full or in part

18% p.a.

50 (3)

Undue or excess claim of input tax credit U/S 42 (10)

24% p.a.

50 (3)

Undue or excess reduction in output tax liability U/S 43 (10)

24% p.a.

Notification No. 13/2017 – Central Tax

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 CGST Act, 2017, the Central Government, on the recommendations of the council, hereby fixes the rate of interest per annum, for the purposes of the election as specified in column (2) of the table below, as mentioned in the corresponding entry in column (3) of the said table.

Section

Rate of Interest

Sub-section (1) of section 50

18%

Sub-section (3) of section 50

24%

Sub-section (12) of section 54

6%

Section 56

6%

Provision to section 56

9%

This notification shall come into force from the 1st July 2017.

Examples Section 50 of CGST Act

Example 1

ABC Ltd. needs to pay the GST of Rs. 10 lakhs on or before 20th May 2018. However, it only manages to pay the tax on 20th June 2018. Please calculate the interest on tax which is to be paid.

Interest on late payment of tax will be Rs. 10 lakhs x 18% x 31/365 = Rs. 15,287

Example 2

Suppose for July, output GST is 1 lakh, input GST is 80,000, and GST payable is 20,000.
This 20,000 is to be paid by 20th August, i.e., 20th of next month.
In case if it is paid on 24th August, the interest of 4 days will be calculated as under:
20,000 x 18% x 4/365
= 39.45 and it will be rounded off to 39.
The total amount payable will be 20,000 + 39 = Rs. 20039.

Notes:

  • Where the tax payable by the registered person as per Form GSTR-3 is more than the tax what has been paid in the Form GSTR-3B, the additional tax can be paid by debiting the electronic cash or credit ledger along with interest on late payment of tax. The tax shall be calculated from 26th August 2017 to the date of debit in electronic cash or credit ledger.
  • Where the input tax credit claimed by the registered person in Form GSTR-2 is less than the input tax credit claimed in Form GSTR-3B; then the difference would be added to his output tax liability and same shall be paid by debiting the electronic cash or credit ledger before submitting the Form GSTR-3.

Where the transitional credit as declared in Form GST TRAN-1 is credited to the electronic credit ledger, the same can be utilized for the payment of the said additional tax liability.

Section 50 of CGST Act

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