Interest on Wrong Availment of IGST Credit I CBIC Circular - 192/04/2023-GST

Описание: Central Board of Indirect Taxes & Customs (CBIC) has issued circular No. 192/04/2023-GST on 17th July 2023 providing clarification on levy of interest U/s 50(3) on wrong availment of IGST Credit and reversal thereof. This circular has been issued post recommendation by GST council meeting held on 11th July 2023. In the knowledge update, we have discussed the captioned circular.

In case of wrong availment and subsequent reversal of IGST credit, for applicability of interest U/s 50(3), it needs to be seen whether the aggregate balance in electronic credit ledger (ECL) of IGST, CGST & SGST/UTGST has fallen below such wrongly availed ITC or not. In case, the aggregate balance has been more than the wrongly availed ITC, then no interest would be chargeable. However, if the aggregate balance is also lower than the wrongly availed ITC, then interest would be payable on differential amount.
Further, it is clarified that balance of GST Compensation Cess in ECL would not be included for above specified interest calculation.

This is a welcome clarification on anomaly arising due to manner of utilisation of ITC available under the heads IGST, CGST and SGST/UTGST. Section 49A of CGST Act read with Rule 88A of CGST Rules, specifically states that credit of CGST and SGST can only be used once credit of IGST is fully exhausted. Thus, wrong availment of IGST credit would generally result into utilisation as well due to specific order of utilisation. Now, it has been clarified that for checking wrong utilisation, aggregate ITC balance of IGST, CGST and SGST/UTGST need to be considered.