Unit –III PAYMENT OF TAX

❖ INTRODUCTION

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/UT 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.

✔ Who is liable to pay GST?

In general, the supplier of goods or services 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 notified cases of intra-state supply of services, the liability to
pay GST may be cast on e-commerce operators through which such services are supplied. Also
Government Departments making payments to vendors above a specified limit [2.5 lakh under
one contract as per S.51(1)(d)] are required to deduct tax (TDS) and E-commerce operators are
required to collect tax (TCS) on the net value [i.e. aggregate value of taxable supplies of goods
and/or services but excluding such value of services on which the operator is made liable to pay
GST under Section 9(5) of the CGST Act, 2017] of supplies made through them and deposit it with
the Government.

✔ When does liability to pay GST arises?

Liability to pay arises at the time of supply of Goods as explained in Section 12 and at the time of
supply of services as explained in Section13.
The time is generally the earliest of one of the 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.

✔ What are the main features of GST payment process?

The payment processes under GST Act(s) 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 tax payer 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.

✔ How can payment be done?

Payment can be done by the following methods:
Yeshwant Mahavidyalaya, Nanded
• Through debit of Credit Ledger of the tax payer 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.
• In cash by debit in the Cash Ledger of the tax payer 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.

❖ KINDS OF LEDGERS TO BE MAINTAINED

❖ ELECTRONIC CASH LEDGER

Electronic Cash Ledger provides a summary of all your GST payments. It reflects the cash available to pay
off your GST tax liability. Thus, any deposit made on the GST portal is credited to your Electronic Cash
Ledger. This means that the amount available in the Electronic Cash Ledger is used for making payments.
These payments are towards tax, interest, GST penalty fees and any other amount payable.

✔ Form GST PMT-05

Assesse need to maintain the electronic cash ledger in Form GST PMT – 05 on the common portal. The
information in FORM GST PMT – 05 is divided into major and minor heads. Major heads include IGST,
CGST, SGST/UTGST, and CESS. And the minor heads include tax, interest, penalty, fees, and others.
These minor heads form a part of the major heads.
Following are the components of Form GST PMT-05:
∙ Serial Number
∙ Date of Deposit
∙ Time of Deposit
∙ Reporting Date by Bank (Reference Number)
∙ Reference Number
∙ Tax period, if applicable
∙ Description
∙ Transaction Type (Debit/Credit)
∙ Amount Debited/Credited
∙ Integrated Tax
∙ Central Tax (CGST)
∙ State Tax
∙ Cess
∙ Total of above
∙ Integrated Tax
∙ Central Tax
∙ State Tax
∙ Cess
∙ Total of above

✔ Form GST PMT-05

1. Maintain Electronic Cash Ledger in Form GST PMT-05
You need to maintain the electronic cash ledger in Form GST PMT – 05 on the common portal.
 Such a ledger reflects:
o amounts credited against deposits and

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o amounts debited for payment of tax, penalty, interest, fees or any other amount.

2. Use One of the Prescribed Modes for Deposit

You can make a deposit on the common portal using any of the following
modes: ∙ internet banking through authorized banks
∙ credit or debit card through an authorized bank
∙ National Electronic Fund Transfer (NEFT)
∙ Real Time Gross Settlement (RTGS)
∙ Over the Counter Deposit through authorized banks for a payment up to Rs. 10,00 per challan
for every tax period. Such a deposit can be made by cash, cheque or demand draft.
However, the limitation for deposit does not apply to the deposit made by any of the
following entities:
o Government departments or any person notified by the commissioner in this regard o
Proper officer having the authority to recover outstanding payments from registered or
unregistered persons. Besides dues, the officer also has the authority to recover
proceeds from selling immovable or movable properties.
o Proper officer having the authority to collect amounts on account of investigation or
enforcement activity or ad hoc deposit. Such amounts can be collected by the way
of cash, cheque or demand draft.

❖ ELECTRONIC CREDIT LEDGER

The electronic credit ledger reflects the amount of Input Tax Credit available to the taxpayer. Thus, every
claim of input tax credit of the registered taxpayer eligible for claiming such a credit is credited to this
ledger. The amount available in the electronic credit ledger is utilized in making payments towards
outward tax liability by the registered taxpayer.

✔ Form GST PMT-02

The electronic credit ledger shall be maintained in form GST PMT – 02. This form shall be maintained
on the common portal for every registered person eligible to claim input tax credit under GST act.
Every claim of the input tax credit is credited to the electronic credit ledger.
Hence, following are the components of Form GST PMT-02:
∙ Serial Number
∙ Date of Deposit
∙ Time of Deposit
∙ Reporting Date by Bank (Reference Number)
∙ Reference Number
∙ Tax period, if applicable
∙ Description
∙ Transaction Type (Debit/Credit)
∙ Amount Debited/Credited
∙ Integrated Tax
∙ Central Tax (CGST)
∙ State Tax (SGST)
∙ Cess
∙ Total
∙ Integrated Tax
∙ Central Tax
 ∙ State Tax
∙ Cess
∙ Total

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✔ GST Payment Rules for Electronic Credit Ledger
1. The electronic credit ledger shall be maintained in form GST PMT – 02 on the common portal. This
ledger reflects the amounts credited against every claim of input tax credit taken under the act.

2. This ledger is debited to an extent the liability is set off or discharged using the credit available.
3. There are cases where a registered taxpayer claims refund of any unutilized amount of input tax
credit from the electronic credit ledger. In such cases, the electronic credit ledger is debited to the
extent of the refund claimed.

4. However, there are situations when such refund filed by the taxpayer is rejected either fully or
partially. In such a case, the amount debited in rule above is credited to the electronic credit
ledger of the concerned taxpayer. The amount credited is restricted to the portion of the claim
rejected. Furthermore, the said amount is credited by a proper officer through an order in form GST
PMT – 03.
5. Entries are not allowed to be made directly in the electronic credit ledger under any circumstance
apart from the rules mentioned above.
6. In case there is any discrepancy in the electronic credit ledger, the registered person
communicates it to the concerned officer. This communication is made through the common
portal in form GST PMT – 04.

❖ ELECTRONIC LIABILITY LEDGER

All the liabilities of a taxable person under GST are maintained in electronic liability register. This register
showcases the amount of tax due, interest, penalty, late fee or any other amount on the common portal.

Hence, the electronic liability register is debited with all the amounts payable by registered taxable
person.

✔ Form GST PMT – 01

Each taxable person liable to pay tax, interest, penalty, late fee or any other amount maintains an
electronic liability register on the common portal. This register is maintained in form GST PMT – 01.
Furthermore, this register is maintained in two parts:

∙ Part I maintains the return related liabilities. All the liabilities that accrue due to return and
payments made against such returns are recorded in this part of the register. This part of the
register also covers the liabilities arising on account of opting for composition scheme (Form
GST CMP-03) and cancellation of registration (Form GST REG 16). The details of all such liabilities
are entered in the liability register in the tax period for which the return has been filed.
∙ Whereas, Part II of the electronic tax liability register contains complete details of liabilities other
than the return related liabilities. These liabilities include:
∙ Liabilities on account of reduction or enhancement in the amount of tax payable. Where such a
reduction or enhancement is a result of decision of appeal, rectification, review, revision etc. ∙
Refund of a pre-deposit claimed by a registered taxpayer for a particular demand. Provided the
taxpayer is allowed to make an appeal for such a refund.
∙ Payments made on account of show cause notice received from the authorities. It also includes
 other payments made voluntarily by the registered taxpayers.
∙ Reduction in amount of penalty on account of payments made against show cause notice or
within the specified time period. These payments are shown automatically in electronic liability
ledger

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✔ Payments Recorded in Electronic Liability Register
1. The amounts that a registered taxable person has to pay towards tax, interest, late fee or any
other amount payable as per the return.
2. Amounts determined by a proper officer as a result of proceedings under the act. These
amounts include the amount payable towards tax, interest, late fee or any other amount.
3. The amount of tax and interest payable by a registered taxable person on account of mismatch
of input tax credit.
4. Any amount of interest that accrues from time to time
5. Amount deducted by government authorities from the payment made to the supplier of
taxable goods or services. This amount is deducted where the total value of supply in a given
contract exceeds Rs. 2,50,000.
6. The amounts collected by an electronic commerce operator on the net value of sales made
through its electronic platform. Provided the supplies for such sales are provided by other
suppliers. Furthermore, the consideration for sales of such supplies is to be collected by the
operator.
7. Amount payable on reverse charge basis
8. The amount payable under composition levy scheme.
9. Amounts payable towards interest, penalty, fees
10. Any other amount payable under GST act

✔ Debit and Credit of Electronic Ledgers

∙ Electronic cash ledger and credit ledger is debited when a registered person makes payment of
the tax liability as per his return. However, the electronic tax liability register is credited on
making such a payment.
∙ The electronic tax liability register of a taxable person is debited if the amounts are due to be
paid on account of demand by government authorities. However, the registered person gets a
relief if he makes an appeal to the appellate authority or appellate tribunal and the appeal is
accepted. Thus, the electronic tax liability register of the registered person gets reduced to the
extent of relief given.
∙ Amount of penalty imposed is reduced partly or fully if the taxable person makes payment of tax,
interest and penalty within the specified time period. Thus, the electronic tax liability register of
the taxable person is credited to the extent such a penalty is reduced.
∙ In case there is any discrepancy in the electronic credit ledger, the registered person
communicates it to the concerned officer. This communication is made through the common
portal in form GST PMT – 04.

❖ INTEREST ON DELAYED PAYMENT OF TAX

Government implemented the massive tax reform in business through GST in July. It is important for
businesses to understand various compliances and implications for non-comply with various rules under
GST. With compliances to be followed, there will be interest and penalty for non-compliance. In this article
we will understand Penalty and Interest to be paid for non-compliance under GST regime.
The due date for payment of GST is 20th of every month. However if you fail to pay the tax by due date
then the taxpayer has to pay the interest on late payment of tax.
The taxpayer is liable to pay interest to the government when:
o GST is paid after the due date of payment of tax
o Input tax credit has been claimed in excess or where it was not eligible to be claimed

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✔ Interest on late payment of tax
Scenario Interest rate per annum

Payment of tax made after due date 18%

Input tax credit claimed in excess 24%

✔ Interest on Refund
If there is a refund claim by the tax payer, department is going to pay interest at 6% per annum.

✔ Penalty
Over and above the interest on late payment, there is a penalty if you are not filing the GST returns
on time.
Frequency Returns Penalty

Monthly GSTR 1, 2, 3, 6,7 and 3B Rs. 100 per day subject to maximum of Rs. 5000/-

Quarterly GSTR 4 Rs. 100 per day subject to maximum of Rs. 5000/-

Annual return GSTR 9 Rs. 100 per day subject to a maximum of 0.25% of
turnover

Final return GSTR 10 Rs. 100 per day subject to maximum of Rs. 5000/-

The above penalty is for each type of taxes applicable i.e. IGST, SGST and CGST
E.g.: If a business owner is doing business within state ( intra-state), then he will be paying Rs. 100 per day
for SGST and Rs. 100 per day for CGST. If a business owner is doing business in 2 or more states, he will be
paying Rs. 100 per day for SGST, Rs.100 per day for CGST and Rs. 100 per day for IGST.

❖ TAX WRONGFULLY COLLECTED OR PAID

Payment of tax based on erroneous determination of ‘nature of supply’ is not permitted to be adjusted
because of the above appropriation of payments. Remedy lies in refund.

Taxable person who has paid tax in error is entitled to refund by first restoring the discharge of the correct
tax due so that the incorrect tax paid reflects on the common portal as ‘paid in excess’ and ✔ IGST paid
in error will be refunded subject to conditions prescribed
✔ IGST payable due to payment of CGST & SGST/UTGST is exempted from payment of interest
on IGST due.
Yeshwant Mahavidyalaya, Nanded