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CA Final · Indirect Tax Laws · Payment of Tax

Under Rule 88B(1) of the CGST Rules, 2017, a registered person files its return late, declaring all supplies, with no section 73 or 74 proceedings begun. Interest on delayed payment is calculated on which amount?

Interest is computed on the portion of tax paid by debiting the electronic cash ledger, for the period of delay beyond the due date. Payment through the credit ledger is excluded from the base, as the rule limits the interest to the cash-paid portion.

  1. AThe total tax payable, whether paid through cash or credit ledger
  2. BThe portion of tax paid by debiting the electronic cash ledgerCorrect
  3. CThe portion of tax paid by debiting the electronic credit ledger
  4. DThe tax remaining unpaid after the due date of the next return

Explanation

Rule 88B(1) provides that interest is calculated on the portion of tax paid by debiting the electronic cash ledger, for the period of delay beyond the due date. Total tax is the wrong base because credit ledger payment is excluded. The proviso also excludes cash credited on or before the due date and lying unused until debit.

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