The Central Board of Indirect Taxes and Customs (CBIC), on Monday notified the retrospective amendment to Section 50(3) to impose interest on undue/excess claim of input tax credit with retrospective effect from 1st July, 2017.
As per the notification, “the Central Government hereby appoints the 5th day of July, 2022, as the date on which the provisions of clause (c) of section 110 and section 111of the said Act shall come into force.”
This retrospective amendment was made in the Finance Act, 2022 but it shall come into force from July 5th, 2022.
According to section 50(3) of CGST Act, 2017, a taxable person who makes an undue or excess claim of input tax credit under section 42(10) or undue or excess reduction in output tax liability under section 43(10), shall pay interest on such undue or excess claim or on such undue or excess reduction.
Finance Bill, 2022 has proposed to substitute new sub-section 50(3) retrospectively, with effect from the 1st July, 2017, so as to provide for levy of interest on input tax credit wrongly availed and utilized, and to provide for prescribing manner of calculation of interest in such cases.
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