What is GST payment?

GST payment is the periodical remittance of GST amount payable by the business. It one of the major requisites for a business to stay compliant. As per the guidelines, every registered regular taxpayer must make GST payment with a due date – 20th of every month along with the submission of GSTR-3B return.

The GST payment can be made online – promising a seamless and transparent experience.

GST payment calculations

In making the GST payment, the GST act allows the businesses to set the eligible input tax credit (ITC) with the output GST collected on the sales. Thus, before making GST payment, businesses need to first apply the GST payment calculations. The GST payment calculations steps are given below

• Determine the total output GST
• Determine the eligible ITC
• Set-off the output GST with the ITC. Here you need to follow the set-up order of CGST, GST and IGST.
• The balance is the GST liability that a business needs to pay.

GST payment rules

As per the GST payment rules, if a person furnishes a GST Monthly Return without paying the tax due, the return furnished will be considered as an invalid return. Without furnishing the return for a month and paying the tax due, the subsequent month’s return cannot be furnished. Also, if the tax due is not paid, interest will be applicable on the same, starting from the GST payment due date on which the tax was supposed to be paid.

Hence, it is necessary to understand the GST payment method in order to avoid the penalties of non-payment of tax.

GST payment process

GST payment ledgers

For the purpose of GST tax payment, every registered dealer will need to maintain 3 ledgers in the GST payment portal, which is the starting step of the GST payment process. The 3 ledgers are:

• Electronic tax liability register – All liabilities of a person towards tax, interest, penalty, late fee or any other amount will be debited here.
  
• Electronic cash ledger – Every deposit made by a person towards tax, interest, penalty, late fee or any other amount will be credited here.
  
• Electronic credit ledger – Input tax credit, as self-assessed and claimed in Form GSTR-2 by a person, will be credited here. This can only be used by a person – only for paying tax, and not for settling other amounts such as interest, late fee, and so on.

GST payment ledgers set-off

To pay the liabilities shown in the Electronic tax liability register, a person can use the balance in the Electronic cash ledger and Electronic credit ledger.

When liability is paid:

• The Electronic tax liability register will be credited by the amount paid.
• The Electronic credit ledger will be debited by credit used for making the payment.
• The Electronic cash ledger will be debited by the amount of deposit used for making the payment.

How to pay GST online?

Here’s a step by step process for how to make your GST payment online.

• Set-off the tax liability by using the credit available in Electronic credit ledger
  
• Deposit money in the Electronic cash ledger to pay the balance tax liability
  
• Generate challan for making the GST payment – Challan for the payment can be generated from the GST payment portal using Form GST PMT-06. The details of the amount to be deposited towards tax, interest, penalty, fees or any other amount should be entered in the challan. The challan generated will be valid for 15 days
  
• Make the GST payment using the given modes –
  • Internet banking through authorised banks
  • Credit card or debit card through authorised banks
  • National Electronic Fund Transfer (NEFT) or Real Time Gross Settlement (RTGS) from any bank
  • Over the counter (OTC) payment through authorized banks for deposits up to Rs.10,000 per challan per tax period, by cash, cheque or Demand Draft (DD)

Note: If the payment is to be made by NEFT or RTGS, a mandate form will be generated along with the challan on the GST portal. The mandate form has to be submitted to the bank from where the payment is made. The mandate form will be valid for 15 days.

• Generation of CIN and credit to Electronic cash ledger – Once the amount paid by a dealer is credited to the concerned government account, a Challan Identification Number (CIN) will be generated and the same will be mentioned in the challan in the GST portal. On receipt of the CIN, the amount paid will be credited to the person’s Electronic cash ledger.

GST payment can be made in 2 ways –

• Payment through Credit  Ledger –

The credit of ITC can be taken by dealers for GST payment. The credit can be taken only for payment of Tax. Interest, penalty and late fees cannot be paid by utilizing ITC.

• Payment through Cash Ledger –

GST payment can be made online or offline. The challan has to be generated on GST Portal for both online and offline GST payment.

Where tax liability is more than Rs 10,000, it is mandatory to pay taxes Online.

7. What is the penalty for non-payment or delayed payment?

If GST is short paid, unpaid or paid late interest at a rate of 18% is required to be paid by the dealer.

Also, a penalty to be paid. The penalty is higher of Rs. 10,000 or 10% of the tax short paid or unpaid.

B. Refunds –

1. What is GST refund?

Usually when the GST paid is more than the GST liability a situation of claiming GST refund arises. Under GST the process of claiming a refund is standardized to avoid confusion. The process is online and time limits have also been set for the same.

2. When can the refund be claimed?

There are many cases where refund can be claimed. Here are some of them –

Excess payment of tax is made due to mistake or omission.

• Dealer Exports (including deemed export) goods/services under claim of rebate or Refund
• ITC accumulation due to output being tax exempt or nil-rated
• Refund of tax paid on purchases made by Embassies or UN bodies
• Tax Refund for International Tourists
• Finalization of provisional assessment

3. How to calculate GST refund?

Let’s take a simple case of excess tax payment made.

Mr. B’s GST liability for the month of September is Rs 50000. But due to mistake, Mr. B made a GST payment of Rs 5 lakh.

Now Mr. B has made an excess GST payment of Rs 4.5 lakh which can be claimed as a refund by him. The time limit for claiming the refund is 2 years from the date of payment.

4. What is the time limit for claiming the refund?

The time limit for claiming a refund is 2 years from relevant date.

The relevant date is different in every case.

Here are the relevant dates for some cases –

Reason for claiming GST Refund	Relevant Date
Excess payment of GST	Date of payment
Export or deemed export of goods or services	Date of despatch/loading/passing the frontier
ITC accumulates as output is tax exempt or nil-rated	Last date of financial year to which the credit belongs
Finalisation of provisional assessment	Date on which tax is adjusted

Also if refund is paid with delay an interest of 24% p.a. is payable by the government.

5. How to claim GST refund?

The refund application has to be made in Form RFD 01 within 2 years from relevant date.

The form should also be certified by a Chartered Accountant.