- The GST Council has taken steps to improve India’s tax regime and make it more business-friendly.
- However, further amendments are needed to make interest liability under GST truly compensatory.
- The proviso to Section 50(1) waives the liability to pay interest on delayed payment of self-assessed tax by an assessee before initiation of recovery proceedings, only to the extent the same is paid through electronic credit ledger (ECRL).
- This waiver of interest should arguably also be extended to cases where tax is paid belatedly from the electronic cash ledger (ECL) in cases where ECL had sufficient balance on the day tax became due.
- The Supreme Court may exercise its power to do complete justice under Article 142 of the Constitution and direct a waiver of interest on delays in paying tax through ECL balance which was available with the government when the liability to pay tax arises.
- Further rationalisation of interest rates is also required.
Source International Tax Review
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