gst late fee Archives | XaTTaX GST Blog

Delayed GST payment: Interest to be charged on net tax liability from September 1

August 26, 2020 admin Comments 0 Comment

The government has said that interest on delayed payment of goods and services tax (GST) will be charged on net tax liability with effect from September 1.

The industry had earlier this year raised concern over the directive of recovery of about Rs 46,000 crore of unpaid interest on delayed GST payment. The interest was charged on gross tax liability.

The GST Council, comprising centre and state finance ministers, in its 39th meeting in March had decided that interest for delay in payment of GST to be charged on net tax liability with effect from July 1, 2017, and law would be amended retrospectively.

However, the Central Board of Indirect Taxes and Customs (CBIC) on August 25, notified September 1, 2020, as the date from which interest would be charged on net tax liability.

Associates Senior Partner Rajat Mohan said this notification seems to be in disconnect with decisions of GST Council wherein it was assured to the taxpayers that the said benefit would be available retrospectively from July 1, 2017.

“Prospective availability of this benefit would mean that millions of taxpayers may be looking at demand of interest for over 3 years from the date of GST implementation. Businesses are expected to approach the High Courts again on this unjustified and illegal demand of interest basis the ‘principle of estoppel’,” Mohan said.

The CBIC had earlier said that GST law permits interest calculation on delayed GST payment on the basis of gross tax liability. This position has been upheld in the Telangana High Court’s decision dated April 18, 2019.

Net GST liability is arrived at after deducting input tax credit from gross GST liability.

Hence, calculating interest on gross GST liability increases the payout burden on businesses.

Tax Partner Abhishek Jain said with the GST Council having approved a retrospective amendment to interest being applicable on net liability, businesses would now await retrospective prescription for this.

“The retrospective notification becomes all the more imperative to subside multiple notices which were issued by the revenue authorities demanding GST on gross liability,” Jain added.

Businesses, other than those under the composition scheme and quarterly return filers, registered under goods and services tax (GST) have to file returns (GSTR-1) showing tax liability by 11th of following month and pay taxes by filing GSTR-3B between 20th-24th (due date varies according to the state in which businesses are registered).

There have been cases where GST assessees have paid taxes after due date but did not pay the interest due on account of delayed payment.

There were doubts on whether the interest was to be paid on gross tax liability or net tax liability. Interest at the rate of 18 per cent is levied on delayed tax payment.

Source: Economic-Times.

XaTTaX is Best GST Software, Simplify your Financial matters with GST eFiling Software for Return Filing & GST Billing Software in India.

Automate Invoicing and get Paid Faster

Integration with all popular accounting software

Manage your GST and E-WayBill Software anytime anywhere using multiple devices

Get Our GST Software DEMO and E-WAY BILL DEMO for FREE

GST Council to discuss waiver of late fee for August 2017 to January 2020

June 2, 2020 admin Comments 0 Comment

The GST Council in its next meeting will discuss waiver of late fee for non-filing of GST returns for August 2017 to January 2020 period.

In a tweet, the Central Board of Indirect Taxes and Customs (CBIC) said, “Issue of GST late fee for the past period (August 2017 to January 2020) to be discussed in the next GST Council meeting.”

The next meeting of the GST Council is likely to be held on June 14.

The CBIC said there have been demands for waiver of late fee for returns which were required to be filed from the beginning of Goods and Services Tax, that is August 2017.

For helping small businesses, having turnover of less than Rs 5 crore, in the current situation arising out of COVID-19, Finance Minister Nirmala Sitharaman had already announced extension of GST returns of February, March, April and May 2020 till June 2020. No late fee will be charged for this period, it said.

The CBIC said late fee is imposed to ensure that the taxpayers file return in time and pay taxes on the amount collected from buyers and due to the government.

This is a step to ensure that a certain discipline is maintained regarding compliance. Honest and compliant taxpayers would be discriminated negatively in the absence of such a provision, it added.

“In GST all decisions are taken by the Centre and the state with the approval of the GST Council. It would not be possible or desirable for the Central government to unilaterally take a view on this issue and therefore, the trade is informed that the issue of late fee would be taken up for discussion in the next GST Council meeting,” it said.

Source: Economic-Times

Get Your GST Returns Filed Easily and
Effortlessly!!!

Our GST software enables you to file your GST returns free of any hassle. Get more details by writing to us at gst@xattax.in.

With 9% interest on delayed payment, taxpayers avoid deferring GST filings

April 16, 2020 admin Comments 0 Comment

Many large taxpayers, those with annual turnover of Rs 5 crore or more, are not availing the extension for paying GST and filing returns as many of them find the 9 per cent per annum interest from the due date too exorbitant.

The government has, in order to lessen the compliance burden on businesses given the outbreak of coronavirus, extended the dates of filing GSTR 3B returns due in March, April and May 2020 to last week of June 2020. Usually, the date for filing returns for a particular month is 20th of the next month. So, for March, the date of filing returns in 20 April, and that for April is 20 May.

Those having aggregate annual turnover less than Rs 5 crore, no interest but late fee and penalty will be charged. But for those with turnover of Rs 5 crore or more, an interest at the reduced rate of 9 per annum from due date (against the current rate of 18 per cent) will be charged.

For businesses with large tax liabilities, delaying the tax payment by three months would mean a large interest outgo, and hence those taxpayers, who have sufficient cash-in-hand are planning to pay the taxes and file returns on time.

“The industry has taken a mixed approach on the delayed return filing, depending upon the cash flow situation. The comparison which is done is the 9 per cent interest (on late payment of GST) and the interest on bank loan. However, filings have slowed down on an overall basis,” says Ritesh Kanodia, partner.

But not all businesses are weighing options between paying interest on late payment of GST and interest on bank loan. For many SMEs with turnover of Rs 5 crore or more, the question is whether to pay the salaries or file GST returns.

Nidhi Goyal, managing partner, says: “Those SMEs which have enough cash flow to pay salaries would like to pay GST liabilities on time and save on the 9 per cent interest cost that they otherwise would incur.

Some businesses are also taking advantage of the fact that the load on GST Network, the IT backbone of the GST regime, will be somewhat less, and are finishing some of the compliances despite the extension of dates.

Rajat Mohan, partner in chartered accountancy, says unlike in normal times around the due dates, one invariably face problems in filing returns, right now the GST Network is working smoothly.

Rajesh Gupta, Co-Founder & Director, says: “Due to lockdown, business transactions have been reduced and left with only 10-20 per cent in total, so accordingly, the load on the network is less as compared to normal. So the network is working smoothly and helping taxpayers to work at home. It has enabled almost more than 20,000 registrations with 10-13 days of the first phase of lockdown.”

Source: Business-Today

Get Your GST Returns Filed Easily and
Effortlessly!!!

Our GST software enables you to file your GST returns free of any hassle. Get more details by writing to us at gst@xattax.in.

GST applicable on Interest / Late Fee / Penalty due to delayed payment of consideration received after its imposition: AAR

October 30, 2019 admin Comments 0 Comment

The Chennai Bench of Authority of Advance Rulings ( AAR ) in an application filed by M/s Chennai port Trust held that interest, late fee and penalty due to delayed payment of consideration received after imposition of GST liable to GST.

The applicant is engaged in the supply of port services and incidental supply of goods like disposal of discarded assets. They are notified as a major port by the Central Government under the Indian ports Act, 1908. The applicant has collected an amount as interest / late fee/penalty for delayed payment of consideration for the original service. This amount was received after July 1st, 2017 and separate invoices Rent Claim Advance (RCA) Receipt are raised by the applicant.

The issue in the present case is the determination of the applicability of GST on receipt of interest, late fee, a penalty by the applicant.

The applicant has contended inapplication of GST on the ground that the supply is a continuous supply of services rendered before July 2017 i.e. introduction of GST.

The bench constituting of Members Ms M.G. Kata and T.K. Selvaan held that the amounts received on or after 01.07.2017 towards interest, late fee, penalty relating to the services of lease/rent, due to delayed payment of consideration for those services rendered by the applicant before 01.07.2017, are liable to GST. It has been held that there is a payment of a separate consideration for this tolerance of delayed payment of lease/rent. Thus, this tolerance on the part of the applicant for the delayed payment of lease/rent by collecting an interest/late fee/penalty is a separate supply of service as covered by Section 7(1)(a) of the CGST Act.