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CS Professional · Goods and Services Tax (GST) and Corporate Tax Planning · Input Tax Credit and Computation of GST Liability

Under the second proviso to Section 16(2), a recipient who fails to pay the supplier the value of supply plus tax within 180 days from the invoice date (supply not under reverse charge) must do what?

The recipient must pay an amount equal to the input tax credit availed, along with interest under Section 50, in the prescribed manner. The second proviso to Section 16(2) applies when payment to the supplier is not made within 180 days, and credit can be re-availed upon later payment.

  1. APay an amount equal to the input tax credit availed, along with interest under Section 50, in the prescribed mannerCorrect
  2. BForfeit the credit with no further liability
  3. CPay only the interest, keeping the credit
  4. DPay a penalty equal to twice the credit and retain the credit

Explanation

The second proviso to Section 16(2) requires payment of an amount equal to the credit availed, along with interest payable under section 50, in the prescribed manner. The third proviso lets the recipient avail the credit again on later payment to the supplier. Retaining the credit is not permitted.

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