GST
Interest cannot be paid from ITC
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Facts
No. Under Sec 49(4), the credit ledger can be used only for output tax. Interest, late fee and penalty are paid from the cash ledger.
Provisions and law
- Sec 49(4), CGST Act 2017Balance in the electronic credit ledger can be used only to pay output tax, not interest, penalty or late fee.
- Rule 87, CGST Rules 2017Deposits in the electronic cash ledger are made through the PMT-06 challan.
Analysis
Keep enough cash in the ledger before filing a late return. Deposit through PMT-06 using net banking, card or other modes. If the cash ledger falls short, the return cannot be filed. Plan cash for interest along with net tax.
Conclusion
- Compute interest and late fee.
- Check the cash ledger balance.
- Deposit via PMT-06 if short.
- File the return or DRC-03.
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Interest on late tax payment, Sec 50
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