The Central Board of Indirect Taxes and Customs (CBIC) on July 17, 2023, issued a circular regarding the Clarification on charging of interest under section 50(3) of the CGST Act, 2017, in cases of wrong availment of IGST credit and reversal thereof.
The following has been stated: -
•The clarification issued pertains to the charging of interest under Section 50(3) of the Central Goods and Services Tax (CGST) Act, 2017, in cases of incorrect availment of Input Tax Credit (ITC) of Integrated Goods and Services Tax (IGST) and the subsequent reversal of the wrongly claimed credit.
•If a taxpayer has mistakenly availed IGST credit to which they were not entitled, they are required to reverse the wrongly claimed credit. Upon such reversal, the taxpayer is liable to pay interest under Section 50(3) of the CGST Act. The interest is applicable from the date of availing the ineligible credit until the date of reversal.
•The clarification aims to provide guidance and ensure adherence to the law regarding the proper utilization of IGST credit. Taxpayers are advised to exercise due diligence in availing and utilizing ITC to avoid any unintentional wrong claims, which may result in interest liabilities under the specified section of the CGST Act.
The detailed circular is attached in the document given below.
[Circular No. 192/04/2023-GST]
