Payment of Taxes under Goods and Service Tax Law
Ease in making payment towards tax and other dues is very important in a country like India. Challenge before the Empowered Committee was to usher in a mechanism of payment which is user friendly and at the same time allows payment through various modes, after utilization of ITC. A seamless payment mechanism has been envisaged.
It is noted that under GST regime, some taxes and duties may remain outside the purview of GST and will continue to be collected in the manner prescribed under existing accounting procedures/rules/manuals, etc. This means that two types of challans (one for GST and other for non-GST) will be used and accounted for by the respective Pay and Accounts Offices (PAOs)/State AGs.
The payment processes under proposed GST regime have the following features:
a) Electronically generated challan from GSTN Common Portal in all modes of payment and no use of manually prepared challan;
b) Facilitation for the taxpayer by providing hassle free, anytime, anywhere mode of payment of tax;
c) Convenience of making payment online;
d) Logical tax collection data in electronic format;
e) Faster remittance of tax revenue to the Government Account;
f) Paperless transactions;
g) Speedy Accounting and reporting;
h) Electronic reconciliation of all receipts;
i) Simplified procedure for banks;
j) Warehousing of Digital Challan.
Mode of Payment:
As per section 35 (1) of the Act, every deposit made towards tax, interest, penalty, fee or any other amount shall be credited to the electronic cash ledger of a taxable person by:
i. internet banking or by using credit/debit cards or
ii. National Electronic Fund Transfer (NEFT) or Real Time Gross Settlement (RTGS) or
iii. any other mode,
Conditions and restrictions with respect to mode of payment and the manner shall be prescribed in the rules.
What is the meaning tax?
As per section 2 (94) of the Act, tax means goods and services tax levied on the supply of goods and/or services under this Act and includes any amount payable under section 8.
Date of deposit:
As per the explanation to section 35 (1) of the Act, the date of credit to the account of the appropriate Government in the authorized bank shall be deemed to be the date of deposit.
Maintenance of electronic ledgers:
These are running electronic ledgers maintained on the dashboard of a taxpayer by GSTN). These would be updated in real time on an activity in connection with these ledgers by the taxpayer. Both the ITC ledger and the cash
ledger will be utilized by the taxpayer for discharging the tax liabilities of the returns and others. Details in these ledgers will get auto populated from previous tax period returns (irrespective of mode of filing return i.e. online /
Cash ledger: As per section 35 (1), any amount deposited to the account of the concerned Government (CGST, SGST, IGST and additional tax) shall be credited to the electronic cash ledger of such person.
ITC ledger: As per section 35 (2), ITC as self-assessed in the return shall be credited to his electronic credit ledger in the first instance. It will have details on ITC claimed & utilized for CGST, SGST & IGST.
Tax Liability ledger: As per section 35 (7) of the act, liabilities of a taxable person in form of tax, interest, fee & penalty towards CGST, SGST & IGST is recorded and maintained in this ledger.
Rules for Utilization of Amount in Electronic Ledger:
Utilization of amount in cash ledger: As per section 35 (3) of the act, amount available in the electronic cash ledger may be used for making any payment towards:
• any other amount payable
Utilization of amount in credit ledger: As per section 35 (4) of the act, amount available in the electronic credit ledger may be used for making any payment towards making any payment towards tax.
FAQs on Payment of GST as released by CBEC (Download FAQs on GST Payment)
Q 1. What are the Payments to be made in GST regime?
Ans. In the GST regime, for any intra-state supply, taxes to be paid are the Central GST (CGST, going into the account of the Central Government) and the State GST (SGST, going into the account of the concerned State Government). For any inter-state supply, tax to be paid is Integrated GST (IGST) which will have components of both CGST and SGST. In addition, certain categories of registered persons will be required to pay to the government account Tax Deducted at Source (TDS) and Tax Collected at Source (TCS). In addition, wherever applicable, Interest, Penalty, Fees and any other payment will also be required to be made.
Q 2. Who is liable to pay GST?
Ans. In general the supplier of goods or service is liable to pay GST. However in specified cases like imports and
other notified supplies, the liability may be cast on the recipient under the reverse charge mechanism. Further, in
some cases, the liability to pay is on the third person (say in the case of e-commerce operator responsible for TCS or
Government Department responsible for TDS).
Q 3. When is GST payment to be done by the taxable person?
Ans. At the time of supply of Goods as explained in Section 12 and at the time of supply of services as explained in
Section 13. The time is generally the earliest of one of the 66 three events, namely receiving payment, issuance of invoice or completion of supply. Different situations envisaged and different tax points have been explained in the aforesaid sections.
Q 4. What are the main features of GST payment process?
Ans. The payment processes under proposed GST regime will have the following features:
• Electronically generated challan from GSTN Common Portal in all modes of payment and no use of manually prepared challan;
• Facilitation for the taxpayer by providing hassle free, anytime, anywhere mode of payment of tax;
• Convenience of making payment online;
• Logical tax collection data in electronic format;
• Faster remittance of tax revenue to the Government Account;
• Paperless transactions;
• Speedy Accounting and reporting;
• Electronic reconciliation of all receipts;
• Simplified procedure for banks;
• Warehousing of Digital Challan.
Q 5. How can payment be done?
Ans. Payment can be done by the following methods:
(i) Through debit of Credit Ledger of the taxpayer maintained on the Common Portal- ONLY Tax can be paid. Interest, Penalty and Fees cannot be paid by debit in the credit ledger. Tax payers shall be allowed to take credit of taxes paid on inputs (input tax credit) and utilize the same for payment of output tax. However, no input tax credit on account of CGST shall be utilized towards payment of SGST and vice versa. The credit of IGST would be permitted to be utilized for payment of IGST, CGST and SGST in that order.
(ii) In cash by debit in the Cash Ledger of the taxpayer maintained on the Common Portal. Money can be deposited in the Cash Ledger by different modes, namely, E-Payment (Internet Banking, Credit Card, Debit Card); Real Time Gross Settlement (RTGS)/ National Electronic Fund Transfer (NEFT); Over the Counter Payment in branches of Banks Authorized to accept deposit of GST.
Q 6. When is payment of taxes to be made by the Supplier?
Ans. Payment of taxes by the normal taxpayer is to be done on monthly basis by the 20th of the succeeding month. Cash payments will be first deposited in the Cash Ledger and the taxpayer shall debit the ledger while making payment in the monthly returns and shall reflect the relevant debit entry number in his return. As mentioned earlier, payment can also be debited from the Credit Ledger. Payment of taxes for the month of March shall be paid by the 20th of April. Composition tax payers will need to pay tax on 68 quarterly basis. Timing of payment will be from 0000 Hrs to 2000 Hrs.
Q 7. Whether time limit for payment of tax can be extended or paid in monthly installments?
Ans. No, this is not permitted in case of self-assessed liability. In other cases, competent authority has been
empowered to extend the time period or allow payment in installments. (Section 55 of MGL).
Q 8. What happens if the taxable person files the return but does not make payment of tax?
Ans. In such cases, the return is not considered as a valid return. Section 27 (3) of the MGL provides that the return
furnished by a taxable person shall not be treated as valid return unless the full tax due as per the said return has
been paid. It is only the valid return that would be used for allowing input tax credit (ITC) to the recipient. In other
words, unless the supplier has paid the entire self-assessed tax and filed his return and the recipient has filed his
return, the ITC of the recipient would not be confirmed. As per section 28, a taxable person who has not furnished
a valid return shall not be allowed to utilize such credit till he discharges his self-assessed tax liability.
Q 9. Which date is considered as date of deposit of the tax dues- Date of presentation of cheque or Date of payment or Date of credit of amount in the account of government account?
Ans. It is the date of credit to the Government account.
Q 10. What are E-Ledgers?
Ans. Electronic Ledgers or E-Ledgers are statements of cash and input tax credit in respect of each registered
taxpayer. In addition, each taxpayer shall also have an electronic tax liability register. Once a taxpayer
is registered on Common Portal (GSTN), 2 e-ledgers (Cash & Input Tax Credit) and an electronic tax liability
register will be automatically opened and displayed on his dashboard at all times.
Q 11. What is a tax liability register?
Ans. Tax Liability Register will reflect the total tax liability of a taxpayer (after netting) for the particular month.
Q 12. What is a Cash Ledger?
Ans. The cash ledger will reflect all deposits made in cash, and TDS/TCS made on account of the taxpayer. The
information will be reflected on real time basis. This ledger can be used for making any payment on account of GST.
Q 13. What is an ITC Ledger?
Ans. Input Tax Credit as self-assessed in monthly returns will be reflected in the ITC Ledger. The credit in this ledger
can be used to make payment of TAX ONLY and not other amounts such as interest, penalty, fees etc.
Q 14. What is the linkage between GSTN and the authorized Banks?
Ans. There will be real time two way linkage between the GSTN and the Core Banking Solution (CBS) of the Bank. CPIN is automatically routed to the Bank via electronic string for verification and receiving payment and a challan identification number (CIN) is to automatically sent by the Bank to the Common Portal confirming payment receipt. No manual intervention will be involved in the process by any one including bank cashier or teller or the taxpayer.
Q 15. Can a taxpayer generate challan in multiple sittings?
Ans. Yes, a taxpayer can partially fill in the challan form and temporarily “save” the challan for completion at a later stage.
A saved challan can be “edited” before finalization. After the tax payer has finalized the challan, he will generate the
challan, for use of payment of taxes. The remitter will have option of printing the challan for his record.
Q 16. Can a challan generated online be modified?
Ans. No. After logging into GSTN portal for generation of challan, payment particulars have to be fed in by the tax
payer or his authorized person. He can save the challan midway for future updation. However once the challan is
finalized and CPIN generated, no further changes can be made to it by the taxpayer.
Q 17. Is there a validity period of challan?
Ans. Yes, a challan will be valid for fifteen days after its generation and thereafter it will be purged from the System.
However, the taxpayer can generate another challan at his convenience.
Q 18. What is a CPIN?
Ans. CPIN stands for Common Portal Identification Number (CPIN) given at the time of generation of challan.
It is a 14 digit unique number to identify the challan. As stated above, the CPIN remains valid for a period of 15
Q 19. What is a CIN and what is its relevance?
Ans. CIN stands for Challan Identification Number. It is a 17 digit number that is 14-digit CPIN plus 3-digit
Bank Code. CIN is generated by the authorized banks/ Reserve Bank of India (RBI) when payment is actually
received by such authorized banks or RBI and credited in the relevant government account held with them. It
is an indication that the payment has been realized and credited to the appropriate government account. CIN
is communicated by the authorized bank to taxpayer as well as to GSTN.
Q 20. What is the sequence of payment of tax where that taxpayer has liabilities for previous months also?
Ans. Section 35(8) prescribes an order of payment where the taxpayer has tax liability beyond the current return
period. In such a situation, the order of payment to be followed is:
- First self-assessed tax and interest for the previous period;
- thereafter self-assessed tax and interest for the current period; and
- thereafter any other amounts payable including any confirmed demands under section 51.
This sequence has to be mandatorily followed.
Q 21. What is an E-FPB?
Ans. E-FPB stands for Electronic Focal Point Branch. These are branches of authorized banks which are authorized 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.
Q 22. What is TDS?
Ans. TDS stands for Tax Deducted at Source (TDS). As per section 37, this provision is meant for Government
and Government undertakings and other notified entities making contractual payments in excess of Rs.
10 Lakhs to suppliers. While making such payment, the concerned Government/authority shall deduct 1% of the
total payable amount and remit it into the appropriate GST account.
Q 23. How will the Supplier account for this TDS while filing his return?
Ans. Any amount shown as TDS will be reflected in the electronic cash ledger of the concerned supplier. He can utilize this amount towards discharging his liability towards tax, interest fees and any other amount.
Q 24. How will the TDS Deductor account for such TDS?
Ans. TDS Deductor will account for such TDS in the following ways:
1. Such deductors needs to get compulsorily registered under section 19 read with Schedule III of MGL.
2. They need to remit such TDS collected by the 10th day of the month succeeding the month in which TDS
was collected and reported in GSTR 7.
3. The amount deposited as TDS will be reflected in the electronic cash ledger of the supplier.
4. They need to issue certificate of such TDS to the deductee within 5 days of deducting TDS failing which fees of Rs. 100 per day subject to maximum of Rs. 5000/- will be payable by such deductor.
Q 25. What is Tax Collected at Source (TCS)?
Ans. This provision is applicable only for E-Commerce Operator under section 43C of MGL. Every E-Commerce
Operator needs to withhold a percentage (to be notified later on the recommendation of the GST Council) of the
amount which is due from him to the supplier at the time of making actual payment to the supplier. Such withheld
amount is to be deposited by such E-Commerce Operator to the appropriate GST account by the 10th of the next
month. The amount deposited as TCS will be reflected in the electronic cash ledger of the supplier.
Q 26. Is the pre-registration of credit card necessary in the GSTN portal for the GST payment?
Ans. Yes. The taxpayer would be required to pre-register his credit card, from which the tax payment is intended,
with the Common Portal maintained on GSTN. GSTN may also attempt to put in a system with banks in getting the
credit card verified by taking a confirmation from the credit card service provider. The payments using credit
cards can therefore be allowed without any monetary limit to facilitate ease of doing business.
Disclaimer : The above post is compiled for informational purpose from study material provided by CBEC.