Economics · Economy
Under Section 50(3) of the Central Goods and Services Tax (CGST) Act, 2017, interest liability on a wrong claim of Input Tax Credit (ITC) arises under which of the following conditions?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1No interest or reversal is required if the restricted credit was availed on motor vehicles used exclusively for passenger transport.
- 2Interest is penal in nature and charged at 24% per annum immediately upon filing the return with an incorrect ITC entry.
- 3Interest is payable at 18% per annum only when the wrongly availed ITC has also been utilized to discharge output tax liability.✓
- 4Interest is levied at 18% per annum automatically from the date the credit is availed in the electronic ledger, regardless of utilization.
Correct answer
Interest is payable at 18% per annum only when the wrongly availed ITC has also been utilized to discharge output tax liability.
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