Relief to industry as CBIC levies interest on cash component of GST liability
- | Divita S Gupta
The Central Board for Indirect Taxes and Customs announced that taxpayers will be charged an interest only on the cash component of delayed payment of tax liability under the Goods and Services Tax. This interest will be charged on the net cash tax liability instead of gross value of tax from a “retrospective” effect, CBIC stated in its circular.
While the CBIC has assured taxpayers that this interest will only be for defaults moving forward and not for previous delays, the CBIC was bombarded by taxpayers raising queries and concerns on social media as the circular was issued prospectively. In their notification dated August 25th, the CBIC stated, ‘In exercise of the powers conferred by sub section (2) of section 1 of the Finance (no.2) Act, 2019 (23 of 2019), the Central Government hereby appoints the 1st day of September 2020 as the date on which the provisions of section 100 of the Finance (no.2) Act, 2019 (23 of 2019), shall come into force.”
Experts have welcomed this move stating that it would significantly benefit taxpayers who have missed their deadline to file returns and are required to pay interest on the entire amount even though the payment of tax is through credit.