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CA Final · Indirect Tax Laws · Payment of Tax

Mehta Traders files its GSTR-3B for a tax period after the due date. The return correctly declares outward supplies, and no proceedings under section 73 or 74 have begun for that period. Total output tax is Rs 3,00,000, paid by debiting Rs 1,20,000 from the electronic credit ledger and Rs 1,80,000 from the electronic cash ledger. Under Rule 88B(1), on which amount is interest for delay computed?

Interest is calculated on Rs 1,80,000. Under Rule 88B(1), when a return is filed late and no section 73 or 74 proceedings have begun, interest applies only to the tax portion paid by debiting the electronic cash ledger, not to the part paid from the credit ledger.

  1. ARs 3,00,000, the total tax payable
  2. BRs 1,20,000, the portion paid through the electronic credit ledger
  3. CRs 1,80,000, the portion paid by debiting the electronic cash ledgerCorrect
  4. DNil, because interest applies only if proceedings have begun

Explanation

Rule 88B(1) states that for a delayed return declaring supplies, with no proceedings begun, interest is calculated on the portion of tax paid by debiting the electronic cash ledger. Here that is Rs 1,80,000. Using Rs 3,00,000 ignores the credit-ledger part, which is excluded.

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