Notification No. 63/2020 – Central Tax GST: Seeks to notify the provisions of section 100 of the Finance (No. 2) Act, 2019 to amend section 50 of the CGST Act, 2017 w.e.f. 01.09.2020.

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📚 Frequently Asked Questions (FAQs): Notification No. 63/2020 – Central Tax

Q1: What is Notification No. 63/2020 – Central Tax about?

Answer:
Notification No. 63/2020 – Central Tax brings Section 100 of the Finance (No. 2) Act, 2019 into effect from 1st September 2020.
This section amends Section 50 of the CGST Act, 2017, to ensure that interest is charged only on the net tax liability (i.e., the portion paid in cash after adjusting ITC).

Q2: What was the issue with Section 50 before this amendment?

Answer:
Earlier, Section 50 of the CGST Act required taxpayers to pay interest on the gross tax liability, including the portion paid through Input Tax Credit (ITC).
This was widely criticized as unfair, since ITC is already the taxpayer’s balance with the government.

Q3: How does the amendment under Section 100 of the Finance (No. 2) Act, 2019 help taxpayers?

Answer:
After this amendment, interest is only payable on delayed cash payments, not on ITC utilized.
✅ Relief for lakhs of taxpayers
✅ Fairer compliance under GST
✅ Reduced financial burden for small and medium businesses
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Q4: What is the effective date of this change?

Answer:
The change under Notification No. 63/2020 – Central Tax is effective from 1st September 2020.

Q5: Which section of the CGST Act has been amended through this notification?

Answer:
Section 50 of the Central Goods and Services Tax (CGST) Act, 2017 — which deals with interest on delayed payment of tax — has been amended.

Q6: What is the exact wording of Section 50 after the amendment?

Answer:
As amended, Section 50(1) reads (in simplified form):
“Interest shall be payable on the portion of tax paid by the registered person through the electronic cash ledger, for the period of delay.”
This eliminates the need to pay interest on ITC-adjusted portions.

Q7: What does Section 100 of the Finance (No. 2) Act, 2019 state?

Answer:
Section 100 of the Finance (No. 2) Act, 2019, specifically introduces the above amendment to Section 50 of the CGST Act.
It provides legislative backing for charging interest only on the net cash liability.

Q8: Is the amendment retrospective or prospective?

Answer:
Although the industry demanded retrospective application (from 1st July 2017), Notification No. 63/2020 makes the amendment effective prospectively — i.e., from 1st September 2020.

Q9: Who benefits the most from this amendment?

Answer:
✅ Small and Medium Businesses that often file returns late.
✅ Taxpayers using significant ITC balances.
✅ Exporters and Traders who maintain large cash flow turnovers.

Q10: How does this impact GST return filing?

Answer:
Taxpayers filing returns after the due date will now calculate interest only on the unpaid cash liability, not on the ITC-adjusted tax.
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Q11: What are the powers under Section 1(2) of the Finance (No. 2) Act, 2019?

Answer:
Under Section 1(2), the government may appoint a specific date for any provision of the Act to come into force.
Notification No. 63/2020 uses this power to enforce Section 100 from 1st September 2020.

Q12: Who issued and signed this notification?

Answer:
The notification was issued by the Central Board of Indirect Taxes and Customs (CBIC) and signed by Shri Pramod Kumar, Director, Government of India.

Q13: How will this affect ongoing GST audits or investigations?

Answer:
For assessments or audits post 1st September 2020, authorities must calculate interest only on net cash liability.
However, for past periods, disputes may still arise if interest was charged on gross tax.
💡 Tip: Keep proper reconciliation records for all pre-September 2020 filings.

Q14: What steps should taxpayers take to comply under the new rule?

Answer:
File returns on time to avoid interest on cash components.
Regularly reconcile ITC credits and payments.
Use accurate software or expert support for GST calculations.
📘 Consult a Finodha GST Expert for help with Section 50 interest calculations.

Q15: How does this notification align with GST Council recommendations?

Answer:
The GST Council, in its 39th meeting (March 2020), recommended that interest should be charged only on the net cash tax liability.
Notification No. 63/2020 fulfills this commitment, making GST compliance more equitable and business-friendly.

🏁 Conclusion

Notification No. 63/2020 – Central Tax marks a significant relief measure for taxpayers by implementing the long-awaited amendment to Section 50 of the CGST Act.
From 1st September 2020, interest on delayed GST payments is applicable only on the net tax liability paid in cash, making GST compliance more rational and taxpayer-friendly.

💡 Stay compliant and penalty-free!
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