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CA Intermediate · Taxation · Payment of Tax

Anand Enterprises filed its GSTR-3B for a tax period and paid the CGST and SGST of Rs 1,00,000 each on 20 days after the due date. Which statement on interest under section 50 is correct?

Interest is payable at 18% per annum on the tax paid late, for the days of delay. No grace period exists. The 24% rate applies only to undue or excess input tax credit claims or excess reduction of output tax liability.

  1. AInterest is payable at 18% p.a. on the tax paid late, for the period of delay, computed on the tax liability not paid in timeCorrect
  2. BInterest is payable at 24% p.a. on the entire turnover
  3. CNo interest is payable if the tax is paid within 30 days of the due date
  4. DInterest is payable at 18% p.a. only on the amount of tax paid through electronic credit ledger

Explanation

Interest on delayed payment of tax is 18% p.a. on the tax unpaid, for the period from the day after the due date to the date of payment. There is no 30-day grace period. Interest at 24% applies to wrongly availed and utilised ITC or excess reduction in output tax, not to ordinary late payment. Interest is on tax, not turnover.

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