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CA Intermediate · Taxation · Payment of Tax

Mehta Industries, a registered person, failed to pay its net output CGST of Rs 2,00,000 and SGST of Rs 2,00,000 for a month by the due date and paid it 30 days late through the cash ledger. Interest is at 18% per annum on the tax unpaid, and the amount is paid in cash. Taking 365 days in a year, what is the total interest payable under CGST and SGST together (nearest rupee)?

The total interest is Rs 5,918. Interest at 18% per annum for 30 days on Rs 2,00,000 works out to Rs 2,959 under CGST, and an equal Rs 2,959 under SGST, because the two taxes are each charged interest on the unpaid amount.

  1. ARs 5,918
  2. BRs 11,836Correct
  3. CRs 2,959
  4. DRs 8,877

Explanation

Interest on the tax payable in cash is 18% p.a. Per Act: CGST interest = 2,00,000 x 18% x 30/365 = Rs 2,959. SGST interest is the same Rs 2,959, so the total is Rs 5,918. Rs 11,836 would double-count; the correct total is Rs 5,918.

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