A person is late in filing GSTR-3B, the summary of his tax
liability during this month is as under:
GST payable on outward supplies: Rs. 10 lakhs
ITC available on inward supplier: Rs. 8 lakhs (no opening and closing balance of ITC)
Would the interest late payment of GST be payable on net liability of Rs 2 lakhs or on gross liability of Rs 10 lakhs ?
Section 50 of CGST Act contains provision relating to payment of interest on the tax due. The same is as follows:
"Every person who is liable to pay tax in accordance with the provisions of this Act or the rules made there under, 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."
Please note that the due amount of tax is Rs 10 lakhs and the same is considered as paid only when the return is filed and amount of ITC is adjusted for payment of tax. Availability of ITC will not be considered for giving a relaxation in interest liability. So you have to pay interest on gross liability of Rs 10 lakhs.