GST Interest & Penalty- Recommendation in GSTR 9C & Final Accounts

  • August 12, 2019
  • CA Chandan Agarwal's Office
Chandan Agarwal
Chandan Agarwal

INTEREST/PENALTY PROVISIONS IN GST LIABILITY ON ACCOUNT OF LATE PAYMENTS – F.Y. 2017-18 & 2018-19

(ALREADY GST STATE WISE DEPARTMENTS HAVE STARTED TO DEMAND INTEREST @18% ON LATE PAYMENT OF GST)

$$ IGNORED BY SUPPLIERS/CAs/ICWAs AT THE TIME OF ACCOUNTING:

  1. In Final Accounts – 2017-18 Liability in Books
  2. In Final Accounts – 2018-19, If already signed Final Accounts – Liability in Books
  3. In GSTR 9C for 2017-18
  4. In Notes of Contingent Liability Clause

This article may be treated as Whistle Blower to the Suppliers & Certifying Authorities as if they have ignored the provisions of GST Interest/Penalty on late payments due to following reasons:

  1. GSTN software of Govt. is automatically calculating late fee on per day basis.
  2. It is not calculating Interest/Penalty as compared to due date and actual date of payment or filing date of return
  3. The software is allowing to file Returns – GSTR 3B without making any payment of Interest/Penalty

LET US READ THE RELATED PROVISIONS IN THE ACT & RESPECTIVE RULES

Chapter X – is dealing with “Payment Of Tax”

Section 49(1) stars with language – Every deposit made towards tax, interest, penalty, fee or any other amount by a person by internet banking or by using credit or debit cards ——————————-.

Section  49 (8) Every taxable person shall discharge his tax and other dues under this Act or the rules made thereunder in the following order, namely:––

(a) self-assessed tax, and other dues related to returns of previous tax periods;

(b) self-assessed tax, and other dues related to the return of the current tax period;

(c) any other amount payable under this Act or the rules made thereunder including the demand determined under section 73 or section 74.

In Explanation (ii) meaning of “other dues” is given –  means interest, penalty, fee or any other amount payable under this Act or the rules made thereunder

Section 50(1) – INTEREST –

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, 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 by the Government on the recommendations of the Council.

(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.

(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 by the Government on the recommendations of the Council.

Penalties as described under Chapter XV – Demands & Recoveries from Section 73 to 84:

It is leviable on variety of occasions imposed by Department on assessments/investigation/search-seizure etc. but not self-calculable so for provisions Orders are referral point at the time of finalising Notes to Account or in Auditors’ Reporting.

MATTER COVERED UNDER GOODS AND SERVICE TAX (GST)

CONCEPT & STATUS & GST AN UP DATE (AS ON 1ST JULY 2019)

9.4.9.3 In principle approval has been given for amendment of section 50 of the CGST Act to provide that interest should be charged only on the net tax liability of the taxpayer, after taking into account the admissible input tax credit, i.e. interest would be leviable only on the amount payable through the electronic cash ledger. This would be implemented once the law is amended.

9.4.14.6 The new return design provides facility for amendment of invoice and also other details filed in the return. Amendment shall be carried out by filing of a return called amendment return. Payment would be allowed to be made through the amendment return as it will help save interest liability for the taxpayers.

9.4.18 Rate of Interest: (As per PPT of GSTN)

9.4.18.1 Rate of interest on delayed payments and delayed refund has been recommended.

NOW WHAT TREATMENT IS REQUIRED TO DEAL WITH THE NEWLY BORNE SITUATION AS USUAL GOVT’S. RUDE AWAKENING

  1. Finalisation of Accounts F.Y.2017-18 have already been done so no re-work is possible.
  2. Working & Finalisation of Accounts 2018-19 may be in process – then both year disclosures shall be given at right place – Items Related To Previous Year as well current year.
  3. Cover defaults if GSTR 9C is pending to file, certifying authorities must disclose and suggest in liability at Part V at Sr. No. I, J & K– “Auditors Recommendation on due to non-reconciliation”.

Recommended Notes in Accounts:

  • There are certain GST payments during F.Y.2018-19 under the GSTNo. ————————– where GST amount was paid delayed along with Late Fee as calculated by GSTN but interest as prescribed under section 50(1) of GST Act, 1961 has not been paid/accrued by the company/in the books respectively, which comes Rs.—————-, (presently taken at 18% per annum). The calculation sheet is attached herewith and the amount will be paid as and when demanded by the Authorities as final payment on cash paid basis.
  • Like wise, for the F.Y.2017-18 is calculated Rs.————–, and the same will be accounted for on cash basis. (the calculation sheet is attached).
  • There is Assessment proceedings under E-way bill provisions/Investigations/Search & Seizures (please tick whichever is applicable) pending/going on, a Provisional Order has been issued & premises with the goods containing worth Rs.———- has been seized or as per Law u/s 73 to 84 (refer section here) penalty for Rs.———– is subject to levied on company, unless outcome of assessment proceedings come, we calculate/recommend provision for Rs.———– as penalty may accrue and final liability shall be accounted for at the time of finalisation of Tax Liability by the Authority of ———– State, Office at ———————————————-, under the GST Officer —————————–, through notice No.————————.

THE SAME MAY BE COVERED UNDER CONTINGENT LIABILITY SCHEDULE. BECAUSE AS PER STATUS OF 1ST JULY 2019 CONCEPT & STATUS THE INTEREST CALCULATION METHODS HAS BEEN RECOMMENDED ALONG WITH RATES ALSO.

Now this is Certifying Authorities they have to recommend in GSTR 9C liability calculation at PART V, in replies to Authorities Supplier will explain the situation and contingency nature of liability due to un-certainty in Act implementation as per the Authorised & Genuine notes given at GST Portal by Govt. Of India on the subject matter.

Source: https://taxguru.in/goods-and-service-tax/gst-interest-penalty-recommendation-gstr-9c-final-accounts.html

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