Answer

1. F

   Facts

   No. Under Sec 50(3) and Rule 88B(3), interest is payable only on ITC wrongly availed and utilised. If your credit balance never fell below the wrong amount, it was not utilised.

2. P

   Provisions and law

   • Sec 50(3), CGST Act 2017Interest is payable on ITC wrongly availed and utilised, from the date of utilisation till reversal, at the notified rate (18 percent a year).
   • Rule 88B, CGST Rules 2017Interest on a late return is on the cash portion only; amounts already in the cash ledger by the due date are excluded; interest on wrongly availed ITC runs from utilisation till reversal.
3. A

   Analysis

   Reverse the wrong ₹40,000 credit in the next GSTR-3B. Show the ledger balances from claim date to reversal date to prove no utilisation. Many notices compute interest on the whole period without checking this. Keep ledger extracts in your file.

4. C

   Conclusion

   1. 1Find the date the wrong ITC was claimed.
   2. 2Check the credit ledger balance every day till reversal.
   3. 3If never below the wrong amount, no interest arises.
   4. 4Reverse the ITC and keep ledger extracts.

General guidance from TaxSavvy’s library of money processes. Laws change; your Savvy confirms the answer on your exact case before anything is filed.