Interest on net GST liability with retrospective effect to get legal backing

Finance Bill proposes amendment in law
The Finance Ministry has cleared the air on interest on net tax liability with retrospective effect by proposing amendment in the GST law.

The Finance Bill 2021 proposes to amend Section 50 of the Central Goods and Services Tax (CGST) Act to substitute the proviso to sub-section (1) so as to charge interest on net cash liability retrospectively with effect from the July 1, 2017

Net GST liability is arrived at after deducting input tax credit from gross GST liability. Tax is deposited along with returns within the prescribed timeline. After the prescribed date, the assessee is to pay interest on tax liability.

Seeking refunds
A senior CBIC official said once the Finance Bill 2021 is enacted, the retrospective amendment will become effective and help in settling old matters. At the same time, those who have already paid higher interest can seek refunds. However, some experts feel assessees may need help from High Court to file refunds.


MS Mani, Partner with Deloitte, says the amendment will reaffirm the views of the Madras HC in the case of Refex Industries and overrule the decision of the Telangana HC in the case of Megha Engineering. “This will clarify to businesses at large that the need to pay interest on delayed payments is only on the net amount paid and will ensure that tax authorities across the country adopt a uniform view on this issue,” he said.


Source: https://www.thehindubusinessline.com/economy/interest-on-net-gst-liability-with-retrospective-effect-to-get-legal-backing/article33881128.ece


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