Section 50 CGST Act 2017 – Interest on delayed payment of tax.

By | April 17, 2017
(Last Updated On: September 19, 2023)

Section 50 CGST Act 2017

 

[ Section 50 of CGST Act 2017 Notified w.e.f 01.07.2017 vide Notification No. 9/2017 – Central Tax Dated 28th June, 2017 ]

 

Section 50 CGST Act 2017 explains Interest on delayed payment of tax  and is covered in Chapter X – Payment of Tax

[Note : CGST Act 2017 also known as CENTRAL GOODS AND SERVICES TAX ACT, 2017 assented by the President of India on 12-4-2017 -An Act to make a provision for levy and collection of tax on intra-State supply of goods or services or both by the Central Government and the matters connected therewith or incidental thereto. ]

Summary of Section 50 of CGST Act

  • Section 50 of CGST act deals with Interest on delayed payment of tax .
  • Section 50 of CGST act expalin the rate, calculation and applicability of interest on delayed payment of tax.
  • section 50(1) states that every person who fails to pay tax within the prescribed period shall pay interest at such rate not exceeding 18% as notified by the Government. The proviso clarifies that interest shall be payable only on that portion of tax which is paid by debiting the electronic cash ledger if the return is furnished after due date but before any proceedings under Section 73 or 74 are initiated.
  • Proviso in Section 50 (1) of CGST act Substituted by the Finance Act, 2021, w.r.e.f. 1-7-2017 
  • Section 50 (2) states that interest shall be calculated from the day after the due date till the date of payment.
  • Section 50(3) of CGST Act is Substituted by the Finance Act, 2022, w.r.e.f. 1-7-2017 . section 50(3) states that where input tax credit has been wrongly availed and utilised, interest shall be paid at such rate not exceeding 24% as notified by the Government on such input tax credit.

Interest on delayed payment of tax.

50. (1) Every person who is liable to pay tax in accordance with the provisions of this Act or the rules made thereunder, but fails to pay the tax or any part thereof to the Government within the period prescribed [See rules 3742 and 96A of the CGST Rules, 2017.], shall for the period for which the tax or any part thereof remains unpaid, pay, on his own, interest at such rate, not exceeding eighteen per cent, as may be notified [ Note 1 , 3]  by the Government on the recommendations of the Council.

5 [Provided that the interest on tax payable in respect of supplies made during a tax period and declared in the return for the said period furnished after the due date in accordance with the provisions of  section 39, except where such return is furnished after commencement of any proceedings under section 73 or section 74 in respect of the said period, shall be payable on that portion of the tax which is paid by debiting the electronic cash ledger.]

(2) The interest under sub-section (1) shall be calculated, in such manner as may be prescribed, from the day succeeding the day on which such tax was due to be paid.

6[(3) Where the input tax credit has been wrongly availed and utilised, the registered person shall pay interest on such input tax credit wrongly availed and utilised, at such rate not exceeding twenty-four per cent. as may be notified by the Government, on the recommendations of the Council, and the interest shall be calculated, in such manner as may be prescribed.]


Notes on Section 50 CGST Act

1. 18% Rate of Interest under Sub-section (1) of section 50 prescribed under CGST Act 2017 vide  Notification No. 13/2017 – Central Tax Dated 28th June, 2017

1A seeks to prescribe 18% rate of interest under sub-section (1) of section 50 by Notification No. 6/2017 – Integrated Tax Dated 28th June, 2017 

2. 24%  Rate of Interest under Sub-section (3) of section 50 prescribed under CGST Act 2017 vide  Notification No. 13/2017 – Central Tax Dated 28th June, 2017

2A seeks to prescribe 24% rate of interest under sub-section (3) of section 50 by Notification No. 6/2017 – Integrated Tax Dated 28th June, 2017  . But 18% Substituted for “24%” by Sixth Schedule of Finance Act, 2022, w.r.e.f. 1-7-2017.

3. 18% Rate of Interest under Sub-section (1) of section 50 prescribed under UTGST Act 2017  vide Notification No. 10/2017 – Union Territory Tax Dtd 30th June, 2017

4. 24%  Rate of Interest under Sub-section (3) of section 50 prescribed under UTGST Act 2017 vide Notification No. 10/2017 – Union Territory Tax Dtd 30th June, 2017

5.   Substituted by the Finance Act, 2021, w.r.e.f. 1-7-2017 [However, Notification No. 16/2021- Central Tax, dated 1-6-2021 appoints 1-6-2021 as the date of enforcement]. Prior to its substitution, proviso, as inserted by the Finance (No. 2) Act, 2019, w.e.f. 1-9-2020, read as under :

Provided that the interest on tax payable in respect of supplies made during a tax period and declared in the return for the said period furnished after the due date in accordance with the provisions of section 39, except where such return is furnished after commencement of any proceedings under section 73 or section 74 in respect of the said period, shall be levied on that portion of the tax that is paid by debiting the electronic cash ledger.”

6.Substituted by the Finance Act, 2022, w.r.e.f. 1-7-2017 [However, Notification No. 09/2022- Central Tax, dated 5-7-2022 appoints 5-7-2022 as the date of enforcement]. Prior to its substitution sub-section (3), read as under:

(3) A taxable person who makes an undue or excess claim of input tax credit under sub- section (10) of section 42 or undue or excess reduction in output tax liability under sub-section (10) of section 43, shall pay interest on such undue or excess claim or on such undue or excess reduction, as the case may be, at such rate not exceeding twenty-four per cent, as may be notified [ Note -2 ,2A 4 ]  by the Government on the recommendations of the Council.

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