CBIC came up with the clarification after a notification issued late on Tuesday suggested that limiting the interest payment liability to net tax dues was applicable prospectively from 1 September
New Delhi: Central Board of Indirect Taxes and Customs (CBIC) on Wednesday clarified that Goods and Services Tax (GST) authorities will not recover interest from businesses on their gross tax liability for delayed tax payments. Instead, interest liability will only be limited on the net tax dues even in past cases.
CBIC came up with the clarification after a notification issued late on Tuesday suggested that limiting the interest payment liability to net tax dues was applicable prospectively from 1 September. That would have exposed businesses to the risk of interest liability on gross tax dues even in past cases, a major concern for tax payers.
CBIC clarified that the notification was issued prospectively due to “certain technical limitations." The clarification assured that “no recoveries shall be made for the past period by the Central and state tax administrations in accordance with the decision taken in the 39th Meeting of GST Council. This will ensure full relief to the taxpayers as decided by the GST Council," said the CBIC statement.
The CBIC notification gives effect to a change in the Central GST Act which was introduced in Finance Act (2) of 2019. Experts pointed out that businesses would suffer if the benefit was not made applicable for past cases too.
An official statement from the finance ministry issued on 14 March after the 39th meeting of the GST Council had said interest for delay in payment of GST will be charged on the net cash tax liability with effect from 1 July, 2017, the day GST was rolled out. That statement also said law was to be amended retrospectively.