Skip to content

CA Intermediate · Taxation · Payment of Tax

Meera Enterprises, a registered person, filed GSTR-3B for a tax period on 20th of the next month instead of the due date. Its net tax liability payable in cash was Rs 2,00,000 and was paid on the date of filing, 10 days after the due date. Assuming the prescribed interest rate of 18% p.a. under section 50 and no ITC wrongly availed, what is the interest payable (rounded to the nearest rupee)?

Interest is Rs 986. Interest at 18% per annum applies on the tax paid late for each day of delay. Computing 2,00,000 x 18% x 10/365 gives about Rs 986.30, which rounds to Rs 986.

  1. ARs 986Correct
  2. BRs 1,000
  3. CRs 1,233
  4. DRs 1,480

Explanation

Interest on delayed payment of tax is 18% p.a. on the tax paid late, for the days of delay. Interest = 2,00,000 x 18% x 10/365 = Rs 986.30, i.e. Rs 986. Rs 1,233 would come from using 12.5 days, and 1,480 results from using 15 days. Rs 1,000 is a rounded guess not based on 365 days.

Did you get it right without looking?

One question tells you little. A timed set on Payment of Tax shows your real accuracy, how long you take and where you lose marks.

Practise Payment of TaxFree diagnostic mock

More Payment of Tax questions