GST Council update: Circular to be issued on manner of calculation of Interest amount to be paid in respect of wrongly availed and utilized IGST Credit

The Union Finance Minister Nirmala Sitaraman presided over the 50th meeting of the GST Council on 11th July 2023 at Vigyan Bhawan in New Delhi including Revenue Secretary, CBIC chairman.

The council has clarified that they will issues circulars regarding the manner of of calculation of interest amount liable to be paid under section 50(3) of CGST Act, 2017 in respect of wrongly availed and utilized IGST credit, clarifying inter alia that in cases of wrong availment of IGST credit, the balance of input tax credit (ITC) in electronic credit ledger, under the heads of IGST, CGST and SGST taken together, has to be taken in consideration while calculating such interest liability as per rule 88B of CGST Rules, 2017.

The Section 50 of the CGST Act states about the interest on delayed payment of GST.

The Ministry of Finance will issue a circular regarding the same to remove the ambiguity and legal disputes of these issues and also which will benefit the taxpayers at large.

The Central Board of Indirect Taxes and Customs (CBIC), as part of the 6 years GST celebration has clarified that “Pay Interest only if wrongly availed ITC is utilised”. The CBIC, through this made the clarification on the payment of the interest.

Another update by the GST is that it has reduced the frequency of filing Form GST ITC-04. Presently, taxpayers are required to file FORM GST ITC-04, on quarterly basis, containing details of all goods sent to job workers and received from job workers.

The GST council also clarified the mismatch in the claim of ITC in GSTR-3B and GSTR-2A. Form GSTR-3B is a simplified summary return and the purpose of the return is for taxpayers to declare their summary GST liabilities for a particular tax period and discharge these liabilities. A normal taxpayer is required to file Form GSTR-3B returns for every tax period.

Form GSTR-2A is a system generated Statement of Inward Supplies for a recipient. Form GSTR-2A will be generated in below scenarios:

1. When the supplier uploads the B2B transaction details in their Form GSTR-1 / 5
2. ISD details will be auto-populated on submission of Form GSTR-6 by their Input Service Distributor
3. TDS & TCS details will be auto-populated on filing of Form GSTR-7 & 8 respectively by the counterparty.
4. Auto-population of Import of goods from overseas, on bill of entry, as received from ICEGATE Portal of Indian Customs.

Also read: 50th GST Council Meeting: Key Highlights

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