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CA Final · Indirect Tax Laws · Payment of Tax

Kaveri Exports Ltd files its GSTR-3B for a tax period after the due date. The return declares supplies of the period, and no proceedings under section 73 or 74 have started for that period. Tax payable is Rs 5,00,000, paid Rs 3,00,000 through the electronic credit ledger and Rs 2,00,000 by debiting the electronic cash ledger. Under Rule 88B(1), on what amount is interest for the delay calculated?

Interest is calculated on Rs 2,00,000. Under Rule 88B(1), where a late return declares the period's supplies and no section 73 or 74 proceedings have begun, interest applies only to the portion of tax paid by debiting the electronic cash ledger, not the part paid through input tax credit.

  1. ARs 5,00,000, the whole tax payable
  2. BRs 3,00,000, the portion paid through credit ledger
  3. CRs 2,00,000, the portion paid by debiting the electronic cash ledgerCorrect
  4. DNil, as the supplies were declared in the return

Explanation

Rule 88B(1) applies to a late return declaring the period's supplies, with no proceedings begun. Interest is computed only on the portion of tax paid by debiting the electronic cash ledger, so it is on Rs 2,00,000. Treating the whole Rs 5,00,000 as the base is the key error.

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