GST has brought digitalization in the world of indirect taxation. The payment processes related to tax, penalty, interest etc. have been digitalized under GST regime. The government has created an online platform to facilitate all such processes.
Section 49 of the Central Goods and Services Tax Act, along with rules published by the Central Board of Excise and Customs (CBEC), govern the new payment procedures. This whitepaper provides an overview of what they entail and looks at the following:
In the GST portal, a taxable person can track his tax liabilities across three ledgers, each maintained in real-time:
The electronic liability register specified under sub-section (7) of section 49 shall be maintained in FORM GST PMT-05
Any amount paid by the taxpayer will be reflected in the electronic cash ledger. The amount available in this ledger may be used for making any payment towards tax, interest, penalty, fees, or any other amount due under the act/rules in the time and manner prescribed. (It is reiterated that any credit in the electronic credit ledger can be utilized only for payment of output tax.)
To initiate a payment, taxpayers should generate a challan online using form GST PMT-06, which will be valid for a period of 15 days. Payment can then be remitted through any of the following modes:
The taxpayer is responsible for any commission due on the payment.
The payment date shall be recorded as the date the payment is credited to the appropriate government account. The date, the payment is debited from the taxpayer’s account is not relevant.
Unregistered taxpayers needing to make a tax payment will still use the online GST portal but with a temporary identification number generated through the portal.
The electronic liability register specified under sub-section (7) of section 49 shall be maintained in FORM GST PMT-01
This ledger records all liabilities of a taxable person including:
Taxpayers should settle their liabilities in the following order:
The electronic liability register specified under section 49 shall be maintained in FORM GST PMT-02
Every claim of Input Tax Credit self-assessed by the taxpayer shall be credited to this ledger. The amount available in this ledger may be used for payment towards output tax only. Under no circumstance can an entry be made directly in the electronic credit ledger.
This ledger may include the following:
The input tax credit available in the electronic credit ledger shall be utilized in the following manner:
|Input tax on||Utilisation (in the order shown)|
|IGST||IGST, CGST, SGST/UTGST|
From the above table, it is evident that central tax shall not be utilized towards payment of state tax or union territory tax; and state tax or union territory tax shall not be utilized towards payment of central tax.
As per section 50 of the CGST Act, interest will start accruing on a delayed payment the day after the payment was due. This applies to both missed payments and payments not made in full.
The payment of interest is automatic and should be made voluntarily, even without a demand. The interest rate, not to exceed 18 percent, will be determined by the Government on the recommendation of the GST Council.
In the case of an undue or excess claim of ITC, or undue or excess reduction in output tax liability, interest shall be paid at a higher rate, not to exceed 24 percent, to be notified by the Government.
|Sr. no.||Form no.||Short description||Purpose|
|1||GST PMT-01||Electronic tax liability register||Any tax, interest, penalty, late fee, or any other amount will be debited to this register|
|2||GST PMT-02||Electronic credit ledger||Every claim of ITC shall be credited to this ledger|
|3||GST PMT-03||Refund to be recredited||Refund of unclaimed ITC ,if rejected, the amount debited from the electronic credit ledger, will be recredited by order of a proper officer|
|4||GST PMT-04||Discrepancy in electronic credit ledger||Discrepancy in electronic credit ledger, communicated to an officer through this form|
|5||GST PMT-05||Electronic cash ledger||Any tax, interest, penalty, late fee, or any other amount to be deposited in cash are credited to this ledger|
|6||GST PMT-06||Challan for deposit of tax,interest, penalty etc.||Generate and pay a challan|
|7||GST PMT-07||Application for intimating discrepancy relating to payment||The application is meant for the tax payer where the amount intended to be paid is debited from his account but CIN(Challan Identification Number) has not been generated or generated but not been reported to the common portal (within 24 hours of debit)|
Whenever a payment of any liability is made, the electronic credit ledger or the electronic cash ledger shall be debited; the electronic tax liability register shall be credited and will display the monthly net tax liability.
Every person who has paid tax on goods and/or services shall be deemed to have passed on the full incidence of such tax to the recipient unless he proves the contrary.
The balance in the electronic cash ledger or electronic credit ledger after payment of tax, interest, penalty, fees, or any other amount payable may be refunded from electronic cash or electronic credit ledger, respectively.
If a refund claim is rejected, either fully or partly, the amount debited, to the extent of rejection, shall be re-credited to the electronic cash ledger or electronic credit ledger by the proper officer.
Within the online GST portal, a unique identification number shall be generated for each debit or credit to the electronic cash or credit ledgers, as the case may be. This number shall be indicated in the corresponding entry on the electronic tax liability register.
To conclude, there is a paradigm shift in the way tax payments will be made in the soon-to-be-in-force GST, as compared to the methods to which we have become accustomed. The shift helps to support GST’s aim to make the entire tax process run smoothly with minimal government involvement and ensure transparency — all with the aid of technology.