Category: GST
Rule 88B, added to the CGST Rules by Notification No. 14/2022‑CT on 5 July 2022, is effective retrospectively from 1 July 2017. It outlines how interest under Section 50 CGST Act, 2017 is to be calculated in various scenarios of delayed tax payment and wrongly claimed ITC
Applicable when GSTR‑3B is filed after the due date but before initiation of proceedings under Sections 73, 74, or 74A.
Interest charged only on the cash-tax amount debited from the Electronic Cash Ledger (ECL), not on the ITC portion.
Proviso (Notification No. 12/2024‑CT, effective 10 July 2024) clarifies: if cash was credited into ECL on or before the due date and remained unused until debited later, that amount is excluded from interest calculation.
For all other situations under Section 50(1), including payments post show‑cause notices or reassessed periods.
Interest is computed on the gross unpaid tax—from the due date until actual payment—at the prescribed rate (currently 18% p.a.)
Where ITC is wrongly availed and utilized, interest is imposed from:
The date of utilization (when ECL balance falls below the wrongly availed ITC amount) up to the date of reversal or payment.
The utilization date is either:
The earlier of return due date or date of filing return (if deficit arises via return-based debit); or
Actual date of debit from ECL in all other scenarios.
Interest under Section 50(1) (delayed tax) is capped at 18% per annum.
Interest under Section 50(3) (wrongly availed ITC) is also 18% p.a. (after rate revision via Finance Act 2022; earlier it was 24%).
Rule 88B(1) offers relief by limiting interest to actual cash delays, beneficial when taxpayers have sufficient ITC but delay filing the return.
After proceedings begin, interest is on gross liability—so early compliance is key.
For wrongly claimed ITC, interest applies only on the portion actually utilized—not the entire amount wrongly claimed.
Circular No. 192/04/2023‑GST clarifies that in wrongly availed IGST credit cases, the total balance across IGST, CGST, and SGST credit ledgers is to be considered for determining utilization, not IGST in isolation.