PAYMENT OF TAX UNDER MODEL ‘GST’ LAW

[Mr. M. GOVINDARAJAN]

Payment of tax

In GST regime the following are the types of payments to be made-

• Tax to the credit of Central Government if it is intra-state supply (CGST);
• Tax to the credit of State Government if it is intra State supply (SGST);
• For inter-state supply tax to be is Integrated GST;
• Certain categories of registered persons are required to pay TDS and TCS;
• Interest, penalty, fees and any other payment as required.

Who are liable to pay?

The following are liable to pay tax-

• The supplier of goods or service;
• The recipient under reverse charge mechanism in specified cases like imports and other notified supplies;
• Third person (in the case of e-commerce operator responsible for TCS or Government Department responsible for TDS).

When tax is to be paid?

The GST payment is to be done at the time of supply of goods as explained in Section 12 and at the time of supply of services as explained in Section 13.  The time is decided by three events, among which occurs earlier.  The three events are receiving payment, issuance of invoice or completion of supply.

Features of GST payment process

The payment processes under the proposed 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 tax payer 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 tax is to be paid?

The payment of taxes by the normal taxpayer is to be done on monthly basis by 20^th of the succeeding month.  The payments may be made through cash ledger as well as credit ledger.  Cash payments will be first deposited in the Cash Ledger and the tax payer shall debit the ledger while making payment in the monthly returns and shall reflect the relevant debit entry number in his return.  The payment of taxes for the month of March shall be paid by the 20^th of April.  In the present regime the service tax as well excise duty is to be paid for the month of March by 31^st March itself.

Composition tax payers are required to pay the tax on quarterly basis.  The timing of payment is from 00.00 hrs to 20.00 hrs.

The date of credit to the credit of the Government account is considered as the date of deposit of tax dues.   In the present regime, if the payment is paid by cheque, the date of receipt of cheque would be considered as the payment date, provided the cheque is not dishonored.   But in GST regime it has been changed.  Actual date of credit is the time of deposit of tax.   The taxable person has to be careful in this regard.

How payment is to be made?

The electronic tax liability register shall be maintained in Form GST PMT-1 on the common portal and all amounts by a taxable person shall be debited to the said register.   The electronic tax liability register shall be debited by-

• The amount payable towards tax, interest, late fee or any other amount payable as per the return filed by the said person;
• The amount of tax, interest, penalty or any other amount payable as determined by a proper officer in pursuance of any proceeding under the Act or as ascertained by the said person;
• The amount of tax and interest payable as a result of mismatch; or
• Any amount of interest that may accrue from time to time.

Payment can be done by two ways as discussed above, namely payment through electronic cash ledger maintained in Form GST PMT-3 and through electronic credit ledger to be maintained in Form GST PMT-2  of the taxpayer maintained in the common portal.

The taxable person has to deposit money in the cash ledger by any of the following mode-

• E-payment through internet banking, credit card, debit card;
• Real time gross settlement (RTGS);
• National Electronic Fund Transfer (NFFT);
• Over the Counter payment in branches of banks authorized to accept deposits.

When the payment is made by NEFT or RTGS from any bank the mandate form shall be generated along with the challan.  The said form shall be submitted to the bank from where the payment is to be made.  Such mandate for shall be valid for 15 days from the date of generation of challan.  On successful credit of the amount to the concerned government account a Challan Identification Number will be generated by the collecting bank and the same shall be indicated in the challan.  Where the bank account of the concerned taxable person is debited but no Challan Identification Number is generated he may represent in Form GST PMT -6 through the common portal to the bank or electronic gateway through which the deposit was initiated.  On receipt of Challan Identification Number from the bank the said amount shall be credited to the electronic cash ledger of the registered taxable person who, or on whose behalf, the deposit has been made and the Common Portal shall make available a receipt to this effect.

The restriction for deposit up to ₹ 10,000/- per challan in case of an Over the Counter payment shall not apply to deposit to be made by-

• Government Departments or any other deposit to be madeby persons as may be notified by the Board/Commissioner (SGST) in this behalf;
• Proper officer or any other officer authorized to recover outstanding dues from any person, whether registered or not, including recovery made through attachment or sale of movable or immovable properties;
• Proper officer or any other officer authorized for the amounts collected by way of cash or cheque, demand draft during any investigation or enforcement activity or any ad hoc deposit.

The tax payers are allowed to take credit of tax paid on inputs and utilize the same for payment of output tax.   No input tax credit on account of CGST shall be utilized towards payment of SGST and vice versa.  The credit of IGST would be permitted to be utilized for payment of IGST, CGST and SGST in that order.  Only tax can be paid through credit ledger of the tax payment.   Interest, penalty and fees cannot be paid by debit in the credit ledger.

Section 35(8) prescribes the method of payment where the taxpayer has tax liability beyond the current period.   In such a situation, the order of payment is as follows:

• Self assessed tax and other duesrelated to returns of previous tax periods;
• Self assessed tax and other dues related to the return of current tax period;
• Any other amount payable under the provisions of the Act or the rules made there under including any confirmed demand under Section 51.

Extension for payment allowed?

In case of self assessed liability no time extension is permitted.  Section 55 of the Act provides for the payment by installment procedure.   According to this section the Commissioner/Chief Commissioner may, on application of a taxable person, for reasons to be recorded in writing, extend the time for payment or allow payment of any amount due under the Act, by such person, in monthly installments not exceeding twenty four,  subject to payment of interest with such restrictions or conditions as may be prescribed.   If the taxable person defaults in payment of any one installment on its due date, the whole outstanding balance payable on such date shall become due and payable forthwith and shall, without any further notice being issued, be liable for recovery.

Nonpayment of tax

In case the taxable person files return and does not make the payment of tax, then such return is not considered as valid return.   Section 27(3) provides that the return furnished by a taxable person shall not be treated as valid return unless the full tax due as per the said return has been paid.  Unless the supplier has paid the entire self assessed tax and filed his return and the recipient has filed his return, the input tax credit of the recipient would not be confirmed.

Pre-registration of credit card

The tax payer would be required to pre-register his credit card, from which the tax payment is intended with the common portal maintained on GSTN which may attempt to put in a system with banks in getting the credit card verified by taking a confirmation from the credit card service provider.  The payments using credit cards can be allowed without any monetary limit to facilitate ease of doing business.

Payment by unregistered person

If any payment is required to be made by a person who is not registered under the Act shall be made on the basis of a temporary identification number generated by the proper officer through the common portal.  The details of such payment shall be recorded in a register in Form GST PMT-5, to be maintained on the common portal.  

Identification number for each transaction

A Unique Identification Number shall be generated at the common portal for each debit or credit to the electronic cash or credit ledger.  The UID relating to discharge of any liability shall be indicated in the corresponding entry in the electronic tax liability register.  A UID shall be generated at the common portal for each credit in the electronic tax liability register for reasons other than the above.

Discussions to this article

[Ganeshan Kalyani]

Nice article sir.

[Navendu Agarwal]

Very nice and detailed article, we created GST Simulator App based on GST Model law. Till real payment starts, business can create invoices and envision their future tax liability after adjusting all credits. Do let us know your feedback.

https://play.google.com/store/apps/details?id=com.gstsamadhaan.android

[Ganeshan Kalyani]

Sir, payment through debit card, credit card is a new method of tax payment introduced in New tax regime. In my view the method seems to be very impressive but at the same time challenging also. Small dealer's need to keep sufficient balance in their account on or before the due date of the tax payment. They need to keep watch over account balance otherwise delay payment will attract interest. How the aforesaid pay ment process is going to work in practical is a concern.