Section 50 of CGST Act

Interest on Delayed Payment of Tax

• Enforced with effect from 1-7-2017.

Section 50 (1)

Every person who is liable to pay tax in accordance with the provisions of this Act or the rules made thereunder, but fails to pay the tax or any part thereof to the Government within the period prescribed, shall for the period for which the tax or any part thereof remains unpaid, pay, on his own, interest at such rate, not exceeding eighteen percent, as may be notified by the Government on the recommendations of the Council:

Provided that the interest on tax payable in respect of supplies made during a tax period and declared in the return for the said period furnished after the due date in accordance with the provisions of section 39, except where such return is furnished after commencement of any proceedings under section 73 or section 74 or section 74A in respect of the said period, shall be payable on that portion of the tax which is paid by debiting the electronic cash ledger.

[Substituted by the Finance Act, 2021, w.r.e.f. 1-7-2017 [However, Notification No. 16/2021- Central Tax, dated 1-6-2021 appoints 1-6-2021 as the date of enforcement).

Prior to substitution, proviso, as inserted by the Finance (No. 2) Act, 2019, w.e.f. 1-9-2020, read under:

"Provided that the interest on tax payable in respect of supplies made during a tax period and declared in the return for the said period furnished after the due date in accordance with the provisions of section 39, except where such return is furnished after commencement of any proceedings under section 73 or section 74 in respect of the said period, shall be levied on that portion of the tax that is paid by debiting the electronic cash ledger."

{Words “or Section 74A” Inserted by the Finance (No. 2) Act, 2024, w.e.f. 1-11-2024}.

Section 50 (2)

The interest under sub-section (1) shall be calculated, in such manner as may be prescribed, from the day succeeding the day on which such tax was due to be paid.

Section 50 (3)

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 percent 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.

Substituted by the Finance Act, 2022, w.r.e.f. 1-7-2017 [However, Notification No. 9/2022- Central Tax, dated 5-7-2022 appoints 5-7-2022 as the date of enforcement).

Prior to its substitution, sub-section (3) read as under:

“A taxable person who makes an undue or excess claim of input tax credit under sub- section (10) of section 42 or undue or excess reduction in output tax liability under sub- section (10) of section 43, shall pay interest on such undue or excess claim or on such undue or excess reduction, as the case may be, at such rate not exceeding twenty-four percent, as may be notified by the Government on the recommendations of the Council."

• See rule 88B of the CGST Rules, 2017.

• For notified rate of interest under sections 50(1)/ (3), 54(12) and 56 and its proviso, see Notification No. 13/2017-Central Tax, dated 28-6-2017.

• For notified rates of interest on delayed payment of tax, see Notification No. 6/2017- Integrated Tax, dated 28-6-2017 and Notification No. 10/2017-Union Territory Tax, dated 30-6-2017.