Further, in case IGST credit wrongly availed subsequently reversed on a certain date, there will not be any interest liability under the said section. However, if the balance of all heads together falls below the credit wrongly availed, then it will amount to utilization of such ITC wrongly availed and will attract interest liability.
Also, the credit of Compensation Cess cannot be considered for the calculation of interest as the same can be utilized only for the payment of compensation cess.
For instance: Mr. A , a registered supplier has wrongly availed ITC of INR 1000 in the month of January’23. Calculate interest liability in the following cases:
1. ITC not utilized and subsequently reversed
2. ITC utilized say in the month of March’23
Solution:
a.In this case, ITC is utilized in the month of March and the interest liability will be calculated from the date of utilization till the date of payment. Accordingly (from April 21, 2023 to July 24, 2023 i.e. 95 days):
=1000*18%*95/365 = 47 (approx)
Hey, it's Vanshika Gupta, a CA Finalist, who has graduated from Dr. Bhim Rao Ambedkar College, University of Delhi(DU).
Working as an Associate II at Nucleus Advisors, I am passionate about indirect taxation and have experience in it.
You can reach me at Vanshika.gupta@nucleusadvisors.in or +918445054009.
