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Detailed Structure of Payment of Taxes and Interest Under GST Law

GST - Payment of Taxes & Interest

Shifting from an old structure to new might often seem inconvenient and thereby, unnecessary but Government is all set to put a benchmark in the history of taxation by introducing the GST Model Law and prove it to one and all how GST will benefit the Indian economy.

Under the new GST regime, Government ensures a hassle-free payment of taxes. In order to make that convenient, Government has come up with various convenient options plus a detailed structure. Take the guide:

Section 49 deals with the Payment of Taxes

A] Electronic Cash Ledger

Electronic Cash Ledger can be of three kinds:

  1. Electronic cash ledger
  2. Electronic credit ledger
  3. Electronic liability ledger

Taxes, fees, penalties and interests can be paid in the following ways:

  • Internet banking
  • Debit or credit card
  • NEFT or RTGS
  • Over the counter payment in Authorised banks for deposit up to Rs.10000 per challan per tax period by cash, cheque or demand draft.

Note: Form-GST PMT-5 is for deposit of tax, interest, penalty and fees.

  • Challan created on Form-GST PMT-6 towards penalties, interest, tax, fees shall be valid for 15 days.
  • Any Challan created by non-registered dealer shall be with temporary identification number.
  • Once the credit to the Government Account is successful, CIN shall be generated. If the same is not generated, the person may file GST PMT-07 through the common portal.

B] Electronic credit ledger

The ITC shall be credited to the Electronic Credit Ledger Account in Form-GST PMT 2

Electronic Credit Ledger Account includes:

  • ITC from ISD
  • ITC from inward supply of registered person
  • ITC available on payment made on reverse charge
  • ITC on stock immediately preceding the day when the person is liable for tax payment.

Note: GST PMT-04 shall be applied in through common portal if the person notices any problem.

Manner of utilization of ITC

  • ITC of IGST available in Electronic Credit Ledger shall be utilized for payment of IGST Liability first and then for the payment of CGST and SGST.
  • The amount of CGST available in Electronic Credit Ledger of SGST shall be utilised for the payment of SGST/ UTGST first and afterwards for IGST.
  • ITC available in Electronic Credit Ledger of SGST/UTGST cannot be utilized for payment of CGST or vice versa.
  • The balance in the cash or credit ledger after the payment of taxes, interest, fees and penalties may be refunded u/s 54 and the amount refunded would be reduced from the respective ledger A/C.

C] Tax Liability Ledger

The amount payable by taxable person shall be debited in Electronic Liability Register in Form GST PMT-01.

Section 50 deals with Interest on Delayed Payment of Tax

If the liable person fails to pay taxes on the due date, he shall pay the unpaid amount at the rate prescribed from the due date to the date till which payment is made and the interest comes into effect from the day the tax becomes due.

Conditions When Interest Is Applicable:

  • Excess reduction in Output tax liability u/s 43(10)
  • Undue or excess claim of ITC
  • Delay in payment of tax
  • Tax return u/s 39 shall be valid only if the tax payable as per the return is fully paid
  • As per section 73(5) and 73(6), if the interest is paid, the adjudicating authority shall not serve any show cause notice.

Note: If the show cause notice has been issued and the interest is paid within 30 days of the issue, no penalty amount shall be payable by the taxpayer.

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