Applicability of Interest Under GST

Interest under GST is one of the most important subjects that businesses need to be aware of. It is charged when a taxpayer fails to pay the tax liability on time. In this article, we will discuss the applicability of interest under GST in India.

Interest Under GST

Interest under GST is charged when a taxpayer fails to pay the tax liability on time. The interest is charged on the tax amount that remains unpaid after the due date for payment of tax. The interest is calculated from the due date of payment till the date of actual payment.

The interest rate under GST is 18% per annum. The interest is calculated on a monthly basis. This means that if the tax liability is not paid on time, interest will be charged at the rate of 1.5% per month.

Applicability of Interest Under GST

Interest under GST is applicable in the following situations:

1. Delayed Payment of Tax : Interest under GST is levied when a taxpayer fails to pay the tax liability within the due date. The due date for payment of tax is 20th of the following month for taxpayers filing monthly returns and the last day of the following quarter for taxpayers filing quarterly returns.

2. Short Payment of Tax : Interest under GST is also applicable when a taxpayer pays less tax than the actual liability. The interest is calculated on the difference between the tax liability and the amount paid.

3. Excess Input Tax Credit Claimed : If a taxpayer claims excess input tax credit, interest under GST is levied on the excess amount claimed. The interest is calculated from the date the excess input tax credit was claimed till the date of its reversal.

4. Excess Refund Claimed : Interest under GST is applicable when a taxpayer claims excess refund. The interest is calculated from the date the refund was due till the date of actual refund.

Conclusion

Interest under GST is an important topic that businesses need to be aware of. It is charged when a taxpayer fails to pay the tax liability on time. The interest rate under GST is 18% per annum.

Businesses should ensure timely payment of tax liability to avoid interest under GST. They should also ensure that they claim the correct amount of input tax credit and refund to avoid any interest under GST.