{"id":15513,"date":"2020-08-29T14:00:03","date_gmt":"2020-08-29T08:30:03","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=15513"},"modified":"2021-03-20T18:30:00","modified_gmt":"2021-03-20T13:00:00","slug":"cbic-notifies-interest-levied-on-net-tax-liability-section-100-finance-act-2019","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/cbic-notifies-interest-levied-on-net-tax-liability-section-100-finance-act-2019\/","title":{"rendered":"CBIC Notifies to facilitate Interest levied on Net Tax Liability as per Section 100 Finance Act 2019"},"content":{"rendered":"\n<p class=\"has-drop-cap\">The Central Government in exercise of its powers conferred by Section 1, sub-section (2) of the Finance Act, 2019, hereby declares that on 1st day of September 2020, the provisions of section 100 of the Finance Act, 2019 shall come into force. Section 100 of a Finance Act, 2019 have inserted the proviso to Section 50 of the GST Act to clarify the fact that Interest levied on Net Tax Liability for the delayed GST payment from Sep 1, 2020.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/cbic-notifies-interest-levied-on-net-tax-liability-section-100-finance-act-2019\/#Finance_Act_2019_contains_the_following_in_section_100\" >Finance Act, 2019 contains the following in\nsection 100<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/cbic-notifies-interest-levied-on-net-tax-liability-section-100-finance-act-2019\/#Issue_Observed_by_a_Law_Committee\" >Issue Observed by a Law Committee<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/cbic-notifies-interest-levied-on-net-tax-liability-section-100-finance-act-2019\/#Amendment_by_Honble_GST_Councils_Recommendation\" >Amendment by Hon&#8217;ble GST Councils Recommendation<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/cbic-notifies-interest-levied-on-net-tax-liability-section-100-finance-act-2019\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Finance_Act_2019_contains_the_following_in_section_100\"><\/span>Finance Act, 2019 contains the following in\nsection 100<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Section 100 of the Finance Act,\n2019, has been notified on Aug 25, 2020, vide Notification no. 63\/2020-Central\nTax amendment. <strong><em>In section 50 of the CGST Act, in sub-section (1), the following\nproviso will be inserted:-<\/em><\/strong><\/p>\n\n\n\n<ul><li>It has been provided that the interest on tax\npayable in respect of supplies made during a tax period and declared in return\nfor the said period furnished after the due date in accordance with the\nprovisions of section 39. <\/li><li>The exception is where such return is furnished\nafter the commencement of any proceedings under section 73 or section 74 in\nrespect of the said period. It will be levied on that portion of the tax paid\nby debiting the electronic cash ledger.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Sections 50 (1) and 50 (2) of the CGST Act, 2017<\/h3>\n\n\n\n<p>The description of Sections 50 (1) and 50 (2) of the CGST Act, 2017 were inserted as below:-<\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter\"><img decoding=\"async\" width=\"589\" height=\"340\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/08\/image-121.png\" alt=\"Sections 50 (1) and 50 (2) of the CGST Act, 2017\" class=\"wp-image-15514\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/08\/image-121.png 589w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/08\/image-121-300x173.png 300w\" sizes=\"(max-width: 589px) 100vw, 589px\" \/><\/figure><\/div>\n\n\n\n<ul><li><strong><em>Section-50 (1) &#8211;<\/em><\/strong> Every person has a liability\nto pay tax in accordance with the provisions of the Act or the rules made there-under.\nHowever, if he fails to pay the tax or any part thereof to the Government\nwithin the period prescribed, must have to pay interest tax or any part thereof\nwhich remains unpaid. The interest at such a rate must not exceed 18% as may be\nnotified by the Government on a Council&#8217;s recommendations.<\/li><\/ul>\n\n\n\n<ul><li><strong><em>Section-50 (2)<\/em><\/strong> The interest under\nsub-section (1) must be calculated in such manner as may be prescribed, from\nthe day succeeding the day on which such tax was due has to be paid.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Interpretation of section 50 (1) of the CGST Act, 2017<\/h3>\n\n\n\n<p>The interpretations of the\naforesaid section 50 (1) views that it does not specify an amount on which\ninterest is to be levied. Hence, it has been opined that the section does not\nspecify the principal amount. It is not a substantial provision. <\/p>\n\n\n\n<p>Under this sub-section, it has\nbeen also interpreted that the interest is leviable on the GST&#8217;s gross amount.\nSome people have opined that section 50 (1) cannot be made effective until the\n&#8216;manner of calculation,&#8217; as mentioned in section 50 (2), as prescribed.<\/p>\n\n\n\n<p>The interest is compensatory in nature, and it can only be levied on the actual unpaid amount. Till Dec 22, 2018, common people were of the view that interest under <a href=\"https:\/\/corpbiz.io\/gst-registration\"><strong>Goods and services tax<\/strong><\/a>. Even if chargeable, it will be charged on the net amount cash liability. <\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important\"><a href=\"https:\/\/corpbiz.io\/learning\/new-gst-registration-in-just-few-steps\/\">Get Your New GST Registration in Just One Step<\/a><\/mark><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Issue_Observed_by_a_Law_Committee\"><\/span>Issue Observed by a Law Committee<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The issue was deliberated and observed\nby a Law Committee in its meeting held on Dec 15, 2018. The Committee has been\nobserved that the proposal to charge interest has applied only on the\ntaxpayer&#8217;s net liability. Moreover, only after taking into account the\nadmissible credit, it can be accepted in principle. Accordingly, an interest\nwould be charged on the delayed payment of the amount payable by an electronic\ncash ledger.<\/p>\n\n\n\n<p>However, where invoices and debit\nnotes have been uploaded in the earlier statements, hereby the interest will be\ncalculated on the amount of tax pre-arranged on the taxable value calculated\nfrom the date on which the tax on such invoices was due. <\/p>\n\n\n\n<p>After 31st meeting of a GST Council, it was published on Dec 22, 2018, that a council has principally approved an amendment to section 50 of CGST Act. The observation of the Interest levied on Net Tax Liability of the taxpayer, after taking into account the admissible input tax credit. Also, the interest would be leviable only on the amount payable through the electronic cash ledger.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Amendment_by_Honble_GST_Councils_Recommendation\"><\/span>Amendment by Hon&#8217;ble GST Councils Recommendation<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The Hon&#8217;ble GST Councils\nrecommendation was regarding the suggested amendment&#8217;s prospective or\nretrospective effect in section 50 (1). The amendment, as produced in the bill,\nwas also silent on its retrospective effect. Once the bill was passed, it has\nbeen notified after more than 12 months from the date of assent of India&#8217;s\npresident. <\/p>\n\n\n\n<h3 class=\"wp-block-heading\">39th Meeting of the GST Council<\/h3>\n\n\n\n<p>The 39th GST Council meeting declared that interest in delayed GST payments would be applicable only to net cash tax liability after deducting the available input tax credits. The interest on the delayed GST payment will no longer be charged based on gross tax liability, but it will charge on net-tax liability.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The council has approved to amend section 50 of the <strong><em>CGST Act<\/em><\/strong><sup><a href=\"https:\/\/en.wikipedia.org\/wiki\/CGST\"><strong><em>[1]<\/em><\/strong><\/a><\/sup> to provide that interest levied on net tax liability of the taxpayer, after taking into account the admissible input tax credit that means the interest would be leviable only on the amount payable through the electronic cash ledger.<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/obtain-gst-registration-in-india\/\">How To Obtain GST Registration in India?<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Central Government in exercise of its powers conferred by Section 1, sub-section (2) of the Finance Act, 2019, hereby declares that on 1st day of September 2020, the provisions of section 100 of the Finance Act, 2019 shall come into force. Section 100 of a Finance Act, 2019 have inserted the proviso to Section [&hellip;]<\/p>\n","protected":false},"author":10,"featured_media":15561,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[16,152],"tags":[933],"acf":{"service_id":"96"},"authorName":"Soumya Bajpai","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/01\/0.jpg","authorDescription":"Soumya has done LLB (Hons) and has a 2+years experience in writing. Her main interest is in reading judgments, new enactments and amendments taking around in law. She always strives to bring the best to work that she does.","postViews":7573,"readingTime":3,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/15513"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=15513"}],"version-history":[{"count":10,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/15513\/revisions"}],"predecessor-version":[{"id":27883,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/15513\/revisions\/27883"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/15561"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=15513"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=15513"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=15513"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}