Tax Payments Under GST

In the GST regime, for any intra-state supply, taxes to be paid are the Central GST (CGST, going into the account of the Central Government) and the State GST (SGST, going into the account of the concerned State Government).  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 Tax Deducted at Source (TDS) and Tax Collected at Source (TCS).  In addition, wherever applicable, Interest, Penalty, Fees and any other payment will also be required to be made.

In general the supplier of goods or service is liable to pay GST.  However in specified cases like imports and other notified supplies, the liability may be cast on the recipient under the reverse charge mechanism.  Further, in some cases, the liability to pa is o the third person (say in the case of e-commerce operator responsible for TCS or Government Department responsible for TDS).

At the time of supply Goods as explained in Section 12 and at the time of supply of services as explained in Section 13.  The time is generally the earliest of one of the 3 events, namely receiving payment, issuance of invoice or completion of supply.  Different situations envisaged and different tax points have been explained in the aforesaid sections.

The payment processes under proposed GST regime will have the following features:

1. Electronically generated challan from GSTN Common Portal in all modes of payment and no use of manually prepared challan;

2. Facilitation for the taxpayer by providing hassle free, anytime, anywhere mode of payment of tax;

3. Convenience of making payment online;

4. Logical tax collection data in electronic format;

5. Faster remittance of tax revenue to the Government Account;

6. Paperless transactions;

7. Speed Accounting and reporting;

8. Electronic reconciliation of all receipts;

9. Simplified procedure for banks;

10. Warehousing of Digital Challan.

What are payments to be made under GST?

Under GST the tax to be paid is mainly divided into 3 –

  • IGST – To be paid when interstate supply is made (paid to center)
  • CGST – To be paid when making supply within the state (paid to center)
  • SGST – To be paid when making supply within the state (paid to state)
CIRCUMSTANCES CGST SGST IGST
Goods sold from Delhi to Bombay NO NO YES
Goods sold within Bombay YES YES NO
Goods sold from Bombay to Pune YES YES NO

Apart from the above payments a dealer is required to make these payments –

  • Tax Deducted at Source (TDS) – TDS is a mechanism by which tax is deducted by the dealer before making the payment to the supplier

Who is liable to pay GST?

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

When is GST payment to be done by the taxable person?

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 generally the earliest of one of the three events, namely receiving payment, issuance of invoice or completion of supply. Different situations envisaged and different tax points have been explained in the aforesaid sections.

How can payment be done?

GST Payment can be done by the following methods:

(i) Through debit of Credit Ledger of the taxpayer maintained on the Common Portal- ONLY Tax can be paid. Interest, Penalty and Fees cannot be paid by debit in the credit ledger.  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. However, 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.

(ii) 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, E-Payment (Internet Banking, Credit Card, Debit Card); Real Time Gross Settlement (RTGS)/ National Electronic Fund Transfer (NEFT); Over the Counter Payment in branches of Banks Authorized to accept deposit of GST.

Whether time limit for payment of tax can be extended or paid in monthly installments?

No, this is not permitted in case of self-assessed liability. In other cases, competent authority has been empowered to extend the time period or allow payment in installments. (Section 55 of MGL).

What happens if the taxable person files the return but does not make payment of tax?

In such cases, the return is not considered as a valid return. Section 27 (3) of the MGL 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. It is only the valid return that would be used for allowing input tax credit (ITC) to the recipient. In other words, unless the supplier has paid the entire self-assessed tax and filed his return and the recipient has filed his return, the ITC of the recipient would not be confirmed.

As per section 28, a taxable person who has not furnished a valid return shall not be allowed to utilize such credit till he discharges his self-assessed tax liability.

How to create or modify GST challan?

A taxpayer can create a challan from GSTN portal for the purpose of payment of taxes. The payment particulars have to be fed in by the tax payer or his authorized person. Its possible to fill in the challan form partially and temporarily “save” the challan for completion at a later stage. A saved challan can be “edited” before finalization. After the tax payer has finalized the challan, it will be generated. The remitter will have option of printing the challan for his record.

Its important to note that once a challan is generated online, it can not be modified. He can save the challan midway for future editing. However once the challan is finalized and CPIN generated, no further changes can be made to it by the taxpayer.

Is there a validity period of challan?

Yes, a challan will be valid for fifteen days after its generation and thereafter it will be purged from the System. However, the taxpayer can generate another challan at his convenience.

What is TDS under GST Regime?

TDS stands for Tax Deducted at Source (TDS). As per section 37, this provision is meant for Government and Government undertakings and other notified entities making contractual payments in excess of Rs.10 Lakhs to suppliers. While making such payment, the concerned Government/authority shall deduct 1% of the total payable amount and remit it into the appropriate GST account.

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