GST Payment Categories and Procedures: FAQs

What are the categories of payment included in GST?

GST is destination-based taxation under dual administration: Centre and State.

• For intra-state supply, Central GST (CGST) and State GST (SGST) must be paid.
• For inter-state supply, Integrated GST, which has components of both CGST and SGST, must be paid.
• Specific groups of registered citizens must pay Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) to the Central Government.
• Interest, fees, and penalties are applicable to certain transactions.

What are TCS and TDS?​

• TDS: Tax Deducted at Source is meant for Government, undertakings of the Government, and other notified entities that make contractual payment for an amount greater than Rs.10 lakhs to suppliers. During such transactions, the concerned Government authority will deduct 1% of the total payable amount and remit it to the appropriate GST account. The amount paid as TDS will be displayed in the electronic cash ledger of the registered user (primarily suppliers), who can use it to pay interest, fees, etc.

• TCS: Tax Collected at Source is a provision applicable only to e-Commerce operators. These operators are supposed to deduct an amount from the consideration paid or payable to the supplier for goods and services.

How does the TDS Deductor account for TDS?​

The TDS Deductor works as follows:

• The deduction must be registered under Section 19.
• The TDS should be collected by the tenth day of the month succeeding the collection month during which it was reported to GSTR-7.
• The electronic cash ledger of the supplier displays the deposited TDS amount.
• A certificate regarding the TDS should be issued to the deductee within 5 days of said deduction. If the deductee failed to comply with the rules, they will have to pay a fee of Rs 100 per day to the deductor, subject to a maximum of Rs 5000.

Who is liable to pay GST and when is it paid?​

The liability list is divided into 3 main sections:

• Suppliers of the services provided are the chief GST payers.
• In destination-based cases, such as imports and other notified supplies, the recipient has to pay GST under the Reverse Charge Mechanism.
• The liability to pay GST can also be directed towards a third person. Example: TCS, imposed on e-commerce operators, and TDS, imposed on Government Departments.

• GST is usually paid at the time of supply of goods. It’s paid at the earliest of three critical events:

• Receiving payment
• Issuance of invoice
• Completion of supply ​

What is the deadline for paying GST tax in India?​

The deadline varies according to the type of taxpayer:

• Payment of taxes by normal taxpayers should be done on a monthly basis- by the 20th of the succeeding month. Example: Taxes due on the month of March, should be paid by April 20.
• Payment of taxes by composition taxpayers should be done on a quarterly basis.

• The date of credit to the Government’s account is considered the date of deposit of due taxes. In the case of self-assessed liability, extension of deadlines and payment on a monthly basis are not permissible. In specific cases, an authority handles the permits for extension of deadlines and monthly payment. In the case of liability from previous months, a mandatory sequence is followed. First, the self-assessed tax and interest for the previous month are paid and then, the self-assessed tax and interest for the current period are paid. Other payable amounts including confirmed demands are processed later. ​

What are the different ledgers and registers involved in the transactions?

When a citizen is registered on the GSTN portal, the following are displayed on the dashboard:

• Cash ledger: This ledger displays cash deposits and those of TCS/TDS. It’s used for making GST payments.
• Input Tax Credit Ledger: Self-assessed monthly returns are displayed on the ITC ledger. The credit option in this ledger is used to make payments to taxes ONLY. Other amounts, such as penalties and fees, are not included in this ledger.
• Electronic Tax Liability Register: This displays the total tax liability of the taxpayer (after calculating the net amount) for a particular month.

What payment modes are available and how do they work?​

Payment is carried out in the following ways:

• The amount can be debited in the credit ledger of the GSTN Common Portal. This method is used solely for taxes. Taxpayers may use the credited taxes paid on input for payment of output tax. However, the input tax credit from SGST accounts cannot be used to process payments for CGST or vice-versa.
• Cash can be debited from the Cash Ledger of the taxpayer’s account on the common GSTN portal. A few different modes of deposit, such as credit card, debit card, and internet banking, are available.
• Through credit card: The credit card must be registered prior to payment. Verification of the credit card is carried out by the service provider, after which the transactions can proceed.

How can I make payments through the GST portal?

The GST portal offers multiple payment options including debit or cash ledger, internet banking, debit card, credit card, RTGS and NEFT transfers, and over the counter payments in banks that are authorized to accept GST payments. In addition to these payment modes, you can use your input tax credits to reduce your outstanding tax liabilities. Learn more about GST Payments. 

How do I apply my input tax credits to offset the various components of my GST payable?

ITC credits are given for each tax component individually, and each one is used to offset the tax liability for its own component first. If there is any ITC left over, then it can be used to offset certain other components. The flow of using ITC to offset your liability will be as follows:

• CGST credit can be used to offset CGST liability; if there is credit left over, it can be applied toward IGST liability next.
• SGST credit can be used to offset SGST liability; if there is credit left over, it can be applied toward IGST liability next.
• IGST credit can be used to offset IGST liability; if there is credit left over, it can be applied toward CGST liability first and then toward SGST liability. 

Let’s consider this example: you have an ITC of Rs. 1,000 under SGST. Your GST liability is Rs. 500 under SGST, Rs. 250 under CGST, and Rs. 250 under IGST. The SGST credit of Rs. 1,000 will be used to offset the liability of SGST of Rs. 500 first, with left over ITC of 1,000 - 500 = Rs. 500. The leftover Rs. 500 cannot be used to offset the CGST liability, but it can be used to offset the IGST liability of Rs. 250. So the leftover ITC will be 500 - 250 = Rs. 250, which will be carried forward to the next month.

What happens when my input tax credit is higher than the GST payable for the current month?

When your input tax credits (ITC) are higher than your GST liability amount, your ITC credits will be used to offset your GST payable amount first. Any ITC left over will be carried forward to the upcoming months.

Will my ITC expire at the end of the financial year?

No, your ITC will not expire. It will be simply carried forward to the next financial year.

Should I pay tax for advance payments?

Yes! Whenever you make advance payments to your suppliers, you are required to pay tax on the advance amount since these records will also be captured in your GST returns.

What are the key features of the GSTN Common Portal?

The GSTN common portal offers the following features:

• Hassle-free payment: Citizens can pay their taxes regardless of their location.
• Electronic generation of challans for all modes of payment.
• Allows easy access to the registered user’s tax data.
• Ease of revenue remittence to the Government’s account.
• Facilitates electronic reconciliation of all receipts.

What are some important features of the electronic challan?

Once the taxpayer logs on to the GSTN portal, payment particulars must be filled out for the generation of a Challan.

• Once the challan is filled, it can be saved for future moderation. A saved challan can also be edited before finalization. A challan is only valid for 15 days after its generation.
• After finalization, a unique 14-digit number called a CPIN (Common Portal Identification Number) is generated to identify the challan.
• Finally,a CIN (Challan Identification Number), a 17-digit number made up of the 14- digit CPIN and a 3- digit bank code, is generated. Generation of the CIN indicates finalization of the payment that will be credited to the Government’s account. A real-time two-way linkage between GSTN and Core Banking Solution (CBS) routes the CPIN to the bank for verification and the CIN from the bank after confirmation.

What is E-FPB?

E-FPB stands for Electronic Focal Point Branch. These are the branches of banks that are authorized for payment collection of GST. Each authorized bank nominates one branch as its E-FPB for Pan-India transactions. For NEFT/RTGS transactions, RBI acts as E-FPB. The E-FPB has 38 accounts (one each for CGST, IGST, and several SGSTs and one for each State/Union Territory).

What happens when a taxable person files the returns but fails to make payment?

The returns filed by that person will be considered invalid until the taxes due are paid completely. The valid returns alone are used to allow ITC (input tax credit) to the recipient. A taxable person will not be permitted to utilize the credit until the self-assessed tax liability is paid.

Example:

• A supplier pays the entire amount of self-assessed tax and files his returns.
• The recipient of the amount then files his returns.
• Only after Step 2 is the ITC of the recipient confirmed.