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Interest in GST to be levied on Net Tax Liability w.e.f. 01-09-2020

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On 25th August 2020, Central Board of Indirect Taxes and Customs (CBIC) has notified the Notification No. 63/2020 – Central Tax in which it has been said that “the Central Government hereby appoints the 1st day of September 2020 as the date on which the provisions of section 100 of the Finance (No.2) Act 2019 shall come into force.

Now when we take a reference to the section 100 of the Finance (No. 2) Act 2019, it reads as follows:-

Amendment of section 50

100. In section 50 of the Central Goods and Services Tax Act, in sub-section (1), the following proviso shall be inserted, namely:–

Provided that the interest on tax payable in respect of supplies made during a tax period and declared in the return for the said period furnished after the due date in accordance with the provisions of section 39, except where such return is furnished after commencement of any proceedings under section 73 or section 74 in respect of the said period, shall be levied on that portion of the tax that is paid by debiting the electronic cash ledger.”.

By decoding the same, it says that the Interest on the tax payable shall be levied on the amount which has been paid by debiting the electronic cash ledger i.e. only on the Net tax liability, the Interest shall be levied. The said amendment shall be effective with effect from 01-09-2020.

However, the confusion shall continue on the said topic as in the Press release dated 14th March 2020 for the 39th GST Council Meeting, it has been clearly mentioned that the Interest for delay in payment of GST to be charged on the net cash tax liability w.e.f. 01-07-2017 (Law to be amended retrospectively) but by reading the Notification, it  clearly depicts that the said amendment is prospective and not retrospective. So, the pendora box of litigation is still open on the said topic unless and until there has been a clarification from the CBIC on the same.

To view and download the Notification, click here Notification 63- Central Tax

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