Delayed GST payments face Rs 46k cr interest

NEW DELHI: Tax authorities have estimated interest dues of close to Rs 46,000 crore from GST taxpayers as penalty for delayed payment, opening a fresh front against late and non-filers.

The Central Board of Indirect Taxes and Customs (CBIC) has instructed top officials across the country to initiate recovery proceedings against those who have not cleared their interest liability, while pointing out that the systems wing has done a detailed analysis of each GST Identification Number for non-payment of taxes by the deadline of 20th of every month. Based on the estimate on February 1, field officers have begun issuing notices, sources told TOI.

Apart from a late payment fee of Rs 100 a day for central GST and a matching amount for state GST, the law also provides for a levy of 18% penal interest.

CBIC has clarified that the interest has to be levied on the entire tax liability and not on the cash payment alone, sources said. In GST, taxpayers can pay a part of the liability in cash and utilise the tax credits to settle their dues. Tax officers said large taxpayers calculated the liability and paid, but the smaller ones did not pay up as it had to be self-assessed.

The instructions come amid a shortfall in GST collections with experts questioning the rationale for levying the penalty on the entire amount and suggesting that many taxpayers will go to court.

“The demands on gross liability will not sustain as the GST Council — in its meeting on December 22, 2018 — proposed amendment in section 50 of CGST Act to provide levy of interest only on cash component of GST. Although amendment to section 50 has already been done by Parliament, it has not yet come into force as the government is awaiting similar amendments by all states in their SGST laws. Once amendment is in force it will have retrospective effect,” said tax lawyer R S Sharma.

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The issue had also come up at the time of service tax and several notices had been challenged in court. “Businesses would expect that any computation of interest on delayed payments should be based on the amount to be discharged in cash and not on the overall liability, else the input tax credit balances become infructuous,” added Deloitte partner M S Mani.



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