“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,” the Board said in a notification dated August 25.
Experts said the move would immensely benefit the industry which has been waiting for the notification to come into effect since last year. “It’s a welcome step… it will benefit assessees who miss the payment of tax inadvertently and pay interest currently on the entire amount, even though the tax payment is through credit,” said Bipin Sapra, partner, indirect tax at EY India.
As things stand, when a demand gets finalized interest is levied on the entire amount. From September, only the amount paid in cash and not through input tax credit (ITC) will be liable to interest. However, the issue would now be on retrospectivity of the relaxation given by the Board, said experts. The Madras High Court in January this year had held that interest under section 50 of Central GST Act can be levied only on belated cash component of tax and not on ITC component. The Court had added that this would be applicable retrospectively from August 1, 2019.
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