GST
Interest keeps running on an unpaid demand
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Facts
Yes. Interest under Sec 50 on unpaid tax runs until the tax is paid, even after the order date. Only the tax portion carries interest; penalty does not.
Provisions and law
- Sec 50(1), CGST Act 2017Interest at 18 percent a year on tax paid late, on the part paid in cash
- Sec 78, CGST Act 2017Amount in an order is payable within three months, after which recovery starts
Analysis
On unpaid tax of ₹8,00,000, interest at 18 percent a year adds about ₹12,000 a month. If you are appealing, interest still runs on the disputed tax, and if you lose, it is payable for the whole period. Paying the part you accept stops interest on that part.
Conclusion
- Separate the tax you accept from the tax you dispute
- Pay the accepted tax now to stop its interest
- Budget for interest on the disputed tax if the appeal fails
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