Feb 132017

Payment of taxes under GST

Payments that are to be made under GST (Sec 44):

  1. For any intra-state supply, taxes to be paid are the Central GST (CGST, going into the account of the Central Government) and
  2. The State GST (SGST, going into the account of the concerned State Government).
  3. 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:

  1. Tax Deducted at Source (TDS) and
  2. Tax Collected at Source (TCS).

Further, In addition, wherever applicable, Interest, Penalty, Fees and any other payment will also be required to be made.

The input tax credit as self-assessed in the return of a taxable person shall be credited to his electronic credit ledger, in accordance with section 36, to be maintained in the manner as may be prescribed.

Who is liable to pay the tax:

  1. Supplier: In general the supplier of goods or service is liable to pay GST.
  2. Recipient: In specified cases like imports and other notified supplies, the liability may be cast on the recipient under the reverse charge mechanism.
  3. Third person: In some cases, the liability to pay is on the third person, for example, in the case of e-commerce operator responsible for TCS or Government Department responsible for TDS).

When to make payment:

  1. For supply of goods: Liability to pay tax arises at the time of supply of Goods as explained in Section 12 and
  2. For supply of service: Liability to pay tax arises at the time of supply of services as explained in Section 13.

The time of supply is generally the earliest of one of the three events, namely:-

  1. Receiving payment,
  2. Issuance of invoice or
  3. Completion of supply.

Different situations envisaged and different tax points have been explained in the aforesaid sections.

Payment of taxes by the normal taxpayer is to be done on monthly basis by the 20th of the succeeding month. Cash payments will be first deposited in the Cash Ledger and the taxpayer shall debit the ledger while making payment in the monthly returns and shall reflect the relevant debit entry number in his return.

Order of making payment from electronic cash ledger:

As per section 44(8) of the model GST law – the payment from electronic cash ledger shall have to make in the following order:

  1. Self-assessed tax, and other dues related to returns of previous tax periods;
  2. Self-assessed tax, and other dues related to return of current tax period;
  3. Any other amount payable under the Act or the rules made there under including the demand determined under section 66 or 67.

Features of Payment procedure:

The payment process proposed under GST regime will 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 taxpayer 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.

When the payment is deemed to be made:

The date of credit to the account of the appropriate Government in the authorized bank shall be deemed to be the date of deposit in the electronic cash ledger. Appropriate government as defined under section 2(11) of model GST law means central government in case of the IGST and the CGST and the state government in case of the SGST.

Manner of making payment:

  1. Through debit of Credit Ledger of the taxpayer maintained on the Common Portal- ONLY Tax can be paid.
  2. 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.
  3. No input tax credit on account of CGST shall be utilized towards payment of SGST and vice versa.
  4. The credit of IGST would be permitted to be utilized for payment of IGST, CGST and SGST in that order.
  5. In cash by debit in the Cash Ledger of the taxpayer maintained on the Common Portal. Money can be deposited in the Cash Ledger by different modes, namely:
    1. E-Payment (Internet Banking, Credit Card, Debit Card);
    2. Real Time Gross Settlement (RTGS)
    3. National Electronic Fund Transfer (NEFT);
    4. Over the Counter Payment in branches of Banks Authorized to accept deposit of GST.