This is a welcome relief for taxpayers who have been facing interest liabilities on wrongly availed ITC. The reduction in the interest rate will help to reduce the financial burden on taxpayers.
Furthermore, the CBIC informs about the reduction in the interest rate on wrongly availed and utilized ITC from 24% to 18% effective from July 1, 2017.
Clarification issued on the aspect of interest is as follows
- Taxpayers who wrongly availed ITC are not liable for Interest until they utilized the same for payment of GST liability
- A decision from retrospective date (01.07.2017) has been taken to provide relief to the taxpayers where interest has to be paid from the day when it has been wrongly utilized
- Rate of interest on wrongly availed and utilized ITC has been reduced to 18% from 24% w.e.f. 01.07.2017
The clarification is a positive step by the CBIC to reduce the compliance burden on taxpayers and to make the GST regime more taxpayer-friendly.
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