CBIC vide Notification No. 63/2020 – Central Tax dated 25th August, 2020 has notified that interest on late payment of GST liability will be payable on net cash liability basis i.e. after deduction of available input tax credit from gross tax liability. This notification is applicable from 1st September, 2020. In the said notification section 100 of the Finance (No. 2) Act, 2019 (23 of 2019) shall come into force and Section 100 of the Finance (No. 2) Act, 2019 says that: 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.” Earlier, in 39th GST Council Meeting it was declared that interest on late payment of GST liability which would be applicable on net cash liability basis will be applicable from retrospective effect i.e. from 1st July, 2017.
However, as per the recent notification it is applicable from 1st September, 2020. Source: https://www.cbic.gov.in/resources//htdocs-cbec/gst/notfctn-63-central-tax-english-2020.pdf
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