Payment of Tax
Introduction Section 49 deals with payment of tax, interest, penalty and other
amounts. Payment of Tax Rules clearly depicts the Government’s intent to focus primarily on
e-payments for the liabilities arising under GST rather than over the counter payments.
Simultaneously, for the small assessee, over the counter payment by cash/cheque/DD is
permissible up to the limit of Rs. 10,000 per challan per tax period. Payments under GST can
be made either through electronic cash ledger or through electronic credit ledger as per the
provisions of Section 49 of CGST Act, 2017 and Rules framed there under.
Types of Payments under GST
For Supply of Inter-state / Intra State:
i. CGST = A/c of the Central Govt.
ii. SGST = A/c of concerned State Govt.
iii. IGST = Components of both CGST and SGST
iv. Tax Deducted at Source (TDS) and Tax Collected at Source (TCS);
v. Additionally, wherever applicable: Interest, Penalty, Fees and Any other payment.
Persons liable for Payment
Generally, Supplier is liable to pay the tax
In Other cases, like:
o Imports and other notified supplies, liabilities may be imposed on the recipient
under the reverse charge mechanism (RCM)
By third person for example in case of:
o E-Commerce = Operator is responsible for TCS
o Contractual Payments = Government / Other notified entities are responsible
for TDS
Recording and maintenance of register/ledgers on the common portal: -
Types of
Register/Ledge
rs
Electronic Liability Electronic Electronic Cash
Register Credit Ledger Ledger
I. Electronic Liability Register: - In terms of provisions of Section 49(7) of the CGST
Act, 2017 read with Rule 1 of Payment of Tax Rules, all liabilities of a taxable person
under this Act shall be recorded and maintained in an electronic liability register to be
maintained in Form GST PMT-01.
Significant notable points are: -
i. All amounts payable shall be debited to this register.
ii. Debit to this register will be done for: -
a. Tax and other dues as per return;
b. Tax and other dues determined by proper officer;
c. Tax & interest due to mismatch;
d. Any interest.
iii. Credit to this register will be done by debiting electronic cash or credit ledger.
Sequence of discharging tax and other dues:
a) Previous tax period
b) Current tax period
c) Any other amount payable under this Act.
Chart showing chronological order of discharge of tax and other dues - Electronic Liability
Register
II. Electronic Credit Ledger: - In terms of provisions of Section 49(2) of the CGST
Act, 2017 read with Rule 2 of Payment of Tax Rules, the Input Tax Credit (ITC) as
self-assessed in the return of a registered person shall be credited to his electronic
credit ledger to be maintained in Form GST PMT-02.
Significant notable points are: -
Input tax credit balance uploaded from GST TRAN – 1 shall be credited to the
Electronic Credit Ledger on common portal;
ITC would be of stock of Inputs, Semi-finished goods and Finished goods on the
relevant date, from which Taxpayer becomes liable;
ITC on inward supplies from Registered Tax Payers;
ITC distributed from Input Service Distributor (ISD);
Permissible ITC on stock held upon conversion from composition scheme;
ITC eligible on payment made on reverse charge basis.
Debit/credit entries: Entries in Electronic credit ledger shall be as under: -
a. Self-assessed ITC in the return as per Section 41 read with Section 49(2) shall
be credited to the ledger.
b. Utilization towards output tax shall be debited to the ledger.
c. Unutilized amount in the Electronic Credit Ledger after payment of tax and
other dues can be claimed as refund subject to the provisions of Section 54 of
CGST Act, 2017 read with Refund Rules. Ledger shall be debited accordingly.
d. If refund is rejected, then ledger shall be re-credited by proper officer by order
in Form GST PMT-03.
Sequence and restriction for the utilization of Input Tax Credit: -
Credit Allowed for Payment of
of IGST CGST SGST
IGST (1) (2) (3)
CGST (2) (1)
SGST (2) (1)
Note: Cross utilization of SGST & CGST & UTGST is not permissible
C. Electronic Cash Ledger
In terms of provisions of Section 49(1) of the CGST Act, 2017 read with Rule 3 of Payment
of Tax Rules, every deposit made towards tax, interest, penalty, fee or any other amount by a
person shall be credited to the electronic cash ledger to be maintained in Form GST PMT-05.
Significant notable points are: -
Payment procedure:
i. Challan to be generated in FORM GST PMT – 06 for the tax, interest, etc. to be
deposited (Valid for 15 days).
ii. Payment by non-registered person shall be made on the basis of temporary
identification number.
iii. Mandate form (Applicable in case of NEFT and RTGS): Where the payment is made
by way of NEFT or RTGS mode, the mandate form shall be generated along with the
challan on the Common Portal and the same shall be submitted to the bank from
where the payment is to be made (The said mandate form will be valid for 15 days
from the date of generation of challan).
iv. On successful payment, a Challan Identification Number (CIN) will be generated and
the same shall be indicated in the challan.
v. On receipt of CIN from the authorized Bank, the said amount shall be credited to the
electronic cash ledger. But if CIN is not generated or not communicated, person may
represent in FORM GST PMT – 07 to bank/electronic gateway.
Debit/credit entries in electronic cash ledger in Form GST PMT-05
Following transactions shall have an effect on the electronic cash ledger and shall be debited/
credited accordingly: - Online banking Internet banking Debit card/credit card NEFT RTGS 6
i. Self-payment shall be credited to the ledger;
ii. TDS or TCS to be credited to electronic cash ledger of the person from whom the
amount was deducted or collected;
iii. Payment towards tax, interest, penalty, fee or any other amount shall be debited to the
ledger.
iv. Balance in Electronic-cash ledger after payment of tax and other dues can be claimed
as refund.
v. Amount claimed as refund to be debited to the ledger. If refund is rejected, ledger to
be re-credited by proper officer by order in Form GST PMT-03;
Note: TDS, TCS, tax under reverse charge and tax in case of composition levy can be made
by debiting electronic cash ledger only.
Mode of Payment
Mode of
payment
Online Over the
RTGS / NEFT
banking counter (OTC)
Payment sources: Payment can be made through following three modes: -
i. Online banking: - Payment of GST by taxpayer can be made through four online
modes: -
Internet banking
Debit card/Credit card
ii. Over The Counter (OTC): - OTC up to Rs. 10,000/- is permitted per challan per
tax period by cash/cheque/DD.
iii. Through banking mode
NEFT
RTGS
Key points regarding mode of payment under GST.
Principal tax liability: Debit to Electronic Credit Ledger of the Taxpayer
maintained on the “Common Portal – Only”;
Interest, Penalty and Fees cannot be paid by debiting the Electronic Credit Ledger;
Amount may be deposited in Electronic Cash Ledger by making E-Payment
(Internet Banking, Credit Card – pre registration with the portal, Debit Card,
RTGS / NEFT) at any authorized branches of Banks to accept GST payments.
Over the Counter payment (OTC) through authorized banks for deposit upto Rs.
10,000/- per Challan per tax period, by cash, cheque or demand draft can also be
made;
The cash deposited would be shown as a credit to Electronic Cash Ledger of the
Taxpayer maintained on the “Common Portal”.
\Concept of Electronic Focal Point Branch (E-FPB)
E-FPB are branches of authorized banks designated to collect payment of GST.
Each authorized bank will nominate only one branch as its E-FPB for pan India
Transactions.
The E-FPB will have to open accounts under each major head for all governments.
Total 38 accounts (one each for CGST, IGST and one each for SGST, for each
State / UT Govt) will have to be opened.
Any amount received by such E-FPB towards GST will be credited to the
appropriate account held by such E-FPB.
For NEFT/RTGS Transactions, RBI will act as E-FPB
Time of Payment
On occurrence of any one of the following events, GST payment would become due
(earliest of the following):
Time of
Payment
Receipt of Issuance of Completion of
advance Invoice Supply
Particular Due dates
CGST / SGST / IGST Payment date 20th of the Succeeding Month on Monthly Basis
for Normal Taxpayer
Composition Taxpayer 20th of the Succeeding Month on Quarterly Basis
TDS / TCS payment 10th of the succeeding month on monthly basis
Credit to the account of Government Date of deposit of Tax
Key feature of Payment Process
Only electronically generated Challan from GSTN for all 3 modes of payment;
Unique 14-digit Common Portal Identification Number (CPIN) for each challan;
Challan can be generated by Taxpayer, authorized representative or Departmental
officers;
Single challan for all four types of taxes;
System of Electronic Cash Ledger on GSTN for each taxpayer;
RBI to act as aggregator and anchor of flow of fund and information about receipts;
Automation and transparency in flow of information;
E-scroll (statement of tax payment) facility will be provided by RBI.
Use of only system generated challans – no re-digitization in the entire work flow
CPIN to be generated by GSTN - to be used as a key identifier up till receipt by Bank
CIN to be generated by collecting Bank - to be used as a key identifier
Accounting Authorities to play a paramount role in reconciliation.
Accounting on the basis of RBI data,
Reconciliation on the basis of GSTN and bank data
Interest on delayed payment of tax (Section 50) Where payment under GST is not made
within the prescribed time, registered taxable person shall pay interest for such delay as
under: - Case Situation Rate of Interest
Case-I: - For delayed payment Maximum rate is 18%.
Every person is liable to pay interest if he defaults in payment of tax liable to be paid
under CGST act at the rate 18 % pa.
Note: interest will be calculated from the day succeeding the day on which such tax was due
to be paid.
Case-II: -For excess claim of ITC/excess reduction in output tax liability Maximum rate is
24%
Any taxable person made excess or under claim of ITC oe excess or reduction in output tax
liability shall pay interest @ 24 %.
Conclusion:
Assessee is liable to pay interest in following three circumstances:
1. Delay in payment of tax (full or partial)
2. Excess or under claim of ITC.
3. Excess or under reduction in output tax liability.
Note: interest liability shall be debited in electronic liability register. And can also be settled
by adjusting electronic cash register balance but not with electronic credit register.
