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Interest on refunds under GST - Explained

By Paras Mehra

( 2.01K Views) June 16, 2017

Interest on refund under GST - Explained

Introduction

The interest on refunds paid by the government supports the fair play on part of the government. This is because government charges interest on late payment of tax, and hence to be neutral it has to pay interest on refunds as well. Let us discuss the small provision:

Interest on refunds under CGST/SGST

1. If any tax ordered to be refunded to any applicant is not refunded within sixty days from the date of receipt of application, then government shall be liable to pay interest along with the refund.

2. The Interest rate on refund can be anywhere between 6 to 8%.

3. The interest on refunds shall be paid from the date immediately after the expiry of sixty days from the date of receipt of application till the date of refund of such tax.

4. The proper officer shall make an order and a payment advice in FORM GST RFD-9, specifying therein the amount of refund which is delayed, the period of delay for which interest is payable and the amount of interest payable.

5. The amount of interest shall be electronically credited to any of the bank accounts of the applicant mentioned in his registration particulars.