Interest on ITC Reversals under GST

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GST Doctor on Tue May 23 2023


After the recommendations of 45th GST Council Meeting, there was some clarity about interest on ITC reversals.

As per Notification No. 09/2022 Central Tax dated 05 July 2022 which refers to Section 110 of Finance Bill 2022 (Budget 2022), section 50(3) of the CGST Act 2017 was amended by replacing the words "availed or utilised" by the words "availed and utilised".

Section 50(3) of CGST Act 2017 (as amended) is reproduced below-

Where the input tax credit has been wrongly availed and utilised, the registered person shall pay interest on such input tax credit wrongly availed and utilised, at such rate not exceeding twenty-four per cent. as may be notified by the Government, on the recommendations of the Council, and the interest shall be calculated, in such manner as may be prescribed

So, in a nutshell if you have availed ineligible ITC and did not utilise it then there will be no interest on reversal of such ITC. This is w.e.f 1 Jul 2017.

Section 50 of CGST Act 2017

Click here to read about Interest on short payment of GST

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