Entire country is going gung-ho about GST, the much-awaited tax reform of these years. As a business, you registered for your GSTIN, managed your outward supplies and inward supplies in a manner that you could calculate your ITC. And then comes the payment of the GST to the government. Wondering How to discharge your GST Liabilities?
While we have already covered the GST registration process and management process in our previous articles, let us look at the payment process under GST.
Electronic Ledgers under GST
As the basic premise of GST is moving the businesses to digital mode, a taxpayer is required to maintain the following three ledgers under GST:
- Electronic Liability ledgers: This is essentially an electronic record of tax liabilities of the taxpayer, which consists of liabilities from
- Tax applicable [based on return forms]
- Reversal of ITC
- Interest or late fees (if any)
- Electronic Credit Ledger: This is an electronic record of the ITC self-assessed and claimed by the taxpayer, consisting of ITC available on
- Inward Supplies
- Distribution from input services distributor (ISD)
- The input of stock held/semi-finished goods or finished goods held in stock
- Electronic Cash Ledger: This is a record of cash deposited by the taxpayer in order to settle/make payments for his tax liabilities.
Payment of GST liabilities
A taxpayer registered on the GSTN portal can pay his/her tax liabilities as follows:
- ITC Credit available
As per rule 88A under GST, a registered taxpayer can settle his tax liabilities from the ITC available in his credit ledger. However, in order to utilise the ITC, the available ITC shall first be utilised towards payment of integrated tax, and the amount remaining, if any, may be utilised towards the payment of Central tax and State tax or Union territory tax, as the case may be, in any order. For any outstanding liabilities, the taxpayer will have to make payments through his/her Cash Ledgers
For further reference please refer , Utilization of Input Tax Credit under GST: Rule 88A, Section 49A and 49B
- Cash Ledger:
Once the taxpayer has settled/adjusted the tax liabilities with ITC available, he is required to pay the remaining balance through his GST Cash Ledgers.
Steps to pay GST through cash ledgers
In order to initiate online cash payment, a registered taxpayer is required to follow the below given steps
- Login to GSTN portal, and select ‘Create Challan’ from the ‘Payment’ button under Services tab.
- Generate payment challan using form GST PMT-06, which will be valid for 15 days.
- The taxpayer can make payments using the below-given modes
- Internet banking (authorized banks only)
- Credit or debit card (authorized banks only)
- National Electronic Fund Transfer (NEFT) or real-time gross settlement (RTGS) (any bank, authorized or unauthorized)
- Over-the-counter (OTC) payment (authorized banks only)
P.S For payments exceeding Rs. 10,000, it is mandatory for businesses to make an electronic payment, and over-the-counter payment shall not be admissible.
If a registered taxpayer does not file his/her GST returns on the given due date, he is liable to be penalised as per the notice sent by the government in form GSTR 3A. However, if the taxpayer or the defaulter fails to file the same, even after 3 months from the issuance of an order for the demand of tax, the government officials can begin with the proceeding to recover unpaid tax under GST.
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