Even With ITC Will Interest Be Charged? Here Are the New GST Rules

Taxpayers are generally required to pay interest if there is a delay in GST payment. However, as per the latest amendments introduced by the government, no interest will be charged on the portion of tax paid through Input Tax Credit (ITC). Interest will now apply only to the tax amount paid in cash, subject to certain conditions.

To avail this benefit, taxpayers must disclose all sales or supply details of a particular month in the return filed for that same period. Even if the return is filed late, interest exemption will be available if the entire tax liability is paid through ITC and all transactions are properly reported in the relevant return.

For example, if a trader records sales worth Rs.1 lakh in January with a tax liability of Rs.12,000 and has ITC of Rs.14,000, there will be no need for cash payment. Even if the January return is filed six months later, no interest will be charged as long as the complete sales details are disclosed in that return. However, if a portion of the sales is shifted to the next month’s return, interest exemption will not apply to that amount.

The exemption will also not be available if tax authorities have already initiated action for non compliance or delayed filing. In such cases, interest will be charged on the entire tax liability. Additionally, if sufficient balance was already available in the cash ledger before the due date and later used for tax payment, interest exemption will apply to that portion as well.