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Interest to be levied on Net Tax Liability instead of Gross Tax Liability from 01 September 2020

Notification No. 63/2020 - Central Tax dated 25.08.2020

Amendment to section 50(1) of CGST Act

Although the above said amendment was introduced by Finance (No. 2) Act 2019, however the said amendment was kept non-operational in law. Now CBIC has notified the effective date of said amendment as 01st September 2020 vide Notification No.63/2020 - Central Tax. So effective 01st September 2020, interest to be levied on Net Tax liability instead of Gross Tax Liability.


Head Rs.
Gross Tax Liability (Output) = (A) 1,00,000
ITC available = (B) 80,000
Net Tax Liabilty (To be paid by debiting cash ledger) = (A - B) 20,000

Earlier interest was being levied by GST department on Gross Tax Liability i.e. Rs. 1,00,000. However w.e.f. 01.09.2020, interest u/s 50 shall be levied by department on net tax liaibilty only i.e. Rs. 20,000. 

Interest Calculation Upto 31.08.2020 From 01.09.2020
Interest u/s 50 of CGST Act @ 18% on Rs. 1,00,000 @ 18% on Rs. 20,000


Below is the reference from the bare law for the amendment. 

Section 50 - Interest on delayed payment of tax.


(1) Every person who is liable to pay tax in accordance with the provisions of this Act or the rules made thereunder, but fails to pay the tax or any part thereof to the Government within the period prescribed, shall for the period for which the tax or any part thereof remains unpaid, pay, on his own, interest at such rate, not exceeding eighteen per cent., as may be notified by the Government on the recommendations of the Council.

"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."


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Aug 26, 2020


CBIC tweets it's press release. The GST Council's decision to be implemented for the period prior to 1st Sep 2020.
By: K Venkateswara Rao
Aug 26, 2020
Good and reliable informatios.Thanks
By: Satheesh.v.k
Aug 27, 2020
Good information
By: Pramod V Jani
Aug 31, 2020
This is good action and appreciate the efforts all associations for their representations.
By: This Is Good Action And Appreciate The Efforts All Associations For Their Representations.
Oct 5, 2020

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