Refund interest paid on ineligible input tax credit, says industry

The levy of interest on availed but unutilised input tax credit is a subject of significant disputes in GST since its implementation

Industry has demanded that interest paid on ineligible input tax credit, which was availed but not utilised under the goods and services tax (GST) regime, be refunded.

At its recent meeting, the GST Council exempted these credits from interest rates with effect from July 1, 2017, when GST was introduced. It, however, did not clarify whether interest already paid will be refunded.

Sandeep Sehgal, director, tax and regulatory, AKM Global, a tax and consulting firm, said, “The treatment needs to be clarified where the taxpayers have already paid interest.” Abhishek Jain, tax partner at EY, said the question is whether a refund