Central Board of Indirect Tax and Customs (CBIC) has issued administrative instruction on 18th September, 2020. The said order has been addressed to all the commissioners of Central Tax and Director General.
The said instruction inter-alias en-lights legal background governing the most debatable topic in GST i.e. interest on late payment has to be charged on Net Tax Cash Liability or Gross.
The table mentioned below covers all provisions made in this regard
Evolutionary Background
| 35th GST Council Meeting Dated 21st June, 2019 | Proposal to Charge Interest on Net Cash Tax Liability |
| Finance Act, 2019 | Proposal to Charge Interest on Net Cash Tax Liability was enacted via amendment made by Finance Act (No. 2), 2019 |
| 39th GST Council Meeting Dated 14th March, 2020 | GST Council Recommended Interest to be charged on net cash liability retrospectively. |
Notification No. 63/2020 – Central Tax-Dated 25th August, 2020 |
Amendment mentioned above applicable prospectively from 1st September, 2020 |
| Press Release Dated 26th August | Press release issued to clarify the position that no recoveries shall be made for the past period as well by the Central and State tax administration |
| Administrative arrangement dated 18th September, 2020 | a. for period 1st July 2017 to 31st August, 2020; filed formations are instructed to recover interest only on net cash liability (i.e that portion of tax which have been paid by debiting the electronic cash ledger or is payable through cash ledger
b. where everever show casuse notice (SCN) have been issued the same may be kept in call book till retrospective amendment in section 50 of the CGST, Act is carried out |
Also Read:Interest on Net Liability to be applicable Prospectively from 1st September, 2020 | Press Release
Click Here to Download CBIC Instruction Dated 18th September, 2020
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Mr. Setia is a CA by Profession and expert in the field of Indirect Taxation Based in Delhi. Rich experience of over 5 year.