Avalara > Blog > Goods and Services Tax > Relief to industry as CBIC levies interest on cash component of GST liability

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.


Avalara helps businesses of all sizes get GST return filing, e-way bill generation and e-invoicing right with cloud-based GST compliance solutions in India. Goods and Services Tax (GST) rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Avalara Author
Divita S Gupta
Avalara Author Divita S Gupta
Divita has served as a writer and editor for top financial services organizations in India. She has written on topics like mutual funds, insurance, taxes, SME financing for globally recognized banking and financial organizations including ICICI, Aditya Birla Group, News Corp. With a Masters in Business Administration from Symbiosis International University, she currently owns a small business in Mumbai.

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