The Finance Ministry has cleared the air on interest on net tax liability with retrospective effect by proposing amendment in the GST law.The Finance Bill 2021 proposes to amend Section 50 of the Central Goods and Services Tax (CGST) Act to substitute the proviso to sub-section (1) so as to charge interest on net cash liability retrospectively with effect from the July 1, 2017.
Net GST liability is arrived at after deducting input tax credit from gross GST liability. Tax is deposited along with returns within the prescribed timeline. After the prescribed date, the assessee is to pay interest on tax liability.A senior CBIC official said once the Finance Bill 2021 is enacted, the retrospective amendment will become effective and help in settling old matters. At the same time, those who have already paid higher interest can seek refunds. However, some experts feel assessees may need help from High Court to file refunds.