A Hyderabad GST commissionerate order has totally changed the scenario for the late GST return filing taxpayers as they would now have to pay interest on even input tax credit (ITC).
The interest will be charged on the ITC available in the electronic credit ledger which is further taken care on the GST network portal. This particular order may raise conflicts within the industry and can even be extended to other commissionerates.
For information, currently, a taxpayer pays INR 100 per day and an additional 18 per cent tax on tax liability. This newly introduced interest may further hamper the industry business.
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The order goes against the previously held decision for not levying interest on other than net tax liability. This means the tax interest may only apply on the tax payable through the electronic cash ledger and not on the electronic credit ledger.
As per the tax expert, “The central government may consider issuing suitable instruction/clarification to provide that in line with the amendment proposed under Section 50, no such recovery proceedings should be initiated by any state government where the taxpayer had sufficient credit balance to discharge GST liability. The government may also consider amending Section 50 retrospectively from July 1, 2017.”