Chapter 10: Payment of Tax

The GST payment system operates entirely through an electronic mode, ensuring transparency and real-time accounting.

Statutory Basis: Sections 49 to 49B of the CGST Act, 2017 and Rules 85 to 87 of the CGST Rules, 2017.

Three types of ledgers are maintained on the GST portal for every registered taxpayer:

Utilisation Rules:

IGST credit → first for IGST, then CGST, then SGST.

CGST credit → only for CGST, then IGST (not for SGST).

SGST credit → only for SGST, then IGST (not for CGST).

Key Principle: Cross-utilisation of CGST and SGST is not allowed.

(a) Modes of Payment

GST payments can be made through the following channels:

Internet banking / debit or credit card via authorised banks.

NEFT / RTGS from any bank.

Over-the-counter (OTC) payment for amounts up to ₹10,000 per challan.

Payment Instrument: All payments are made using Challan in Form GST PMT-06, generated on the portal.

(b) Timing of Payment

Tax liability must be discharged before filing GSTR-3B of the respective tax period.

Monthly taxpayers: On or before the 20th of the following month.

Quarterly taxpayers (QRMP Scheme): Payment via PMT-06 by 25th of the month following the quarter.

Important:

GST liability must be paid in cash (via Electronic Cash Ledger) to the extent it cannot be offset by ITC.

The payment date is the date of credit to the Government account.

Legal Reference: Section 50 of the CGST Act, 2017.

Interest becomes payable when a taxpayer delays payment of tax beyond the due date.

Key Points:

Interest is payable from the day after the due date till the actual date of payment.

Interest liability applies only on the net cash tax liability (as per proviso inserted vide Notification No. 63/2020-CT dated 25.08.2020).

Interest cannot be waived except through statutory notification.

Example: Tax payable ₹50,000 for April due on 20 May, paid on 25 May → Delay = 5 days → Interest = ₹50,000 × 18% × 5/365 = ₹123.

Statutory Basis: Section 51 of the CGST Act, 2017 and Rule 66 of CGST Rules.

(a) Who Must Deduct TDS

Following entities are required to deduct TDS @ 2% (1% CGST + 1% SGST) on payments made to suppliers:

Departments or establishments of the Central or State Government,

Local authorities,

Government agencies,

Entities notified under Section 51 (e.g., public sector undertakings, government bodies).

(b) When to Deduct

TDS to be deducted when:

Total value of supply under a contract exceeds ₹2,50,000 (excluding tax), and

Supplier and recipient are both registered under GST.

(c) Compliance Requirements

Example: If ₹10,00,000 + GST is paid by a PSU to a vendor → TDS @2% = ₹20,000 to be deducted and deposited by the PSU. Supplier can claim this TDS amount as credit in his Electronic Cash Ledger.

Statutory Basis: Section 52 of the CGST Act, 2017 and Rule 67.

Applicable to e-commerce operators facilitating supplies through their digital platforms.

(a) Who Collects TCS

Every e-commerce operator (ECO) such as Amazon, Flipkart, Swiggy, Zomato, etc. must collect TCS from the suppliers selling through their platform.

(b) Rate of TCS

1% of net value of taxable supplies (0.5% CGST + 0.5% SGST).

Net value = Taxable outward supplies – Returns.

(c) Compliance Requirements

Note: The TCS collected is credited to the supplier’s Electronic Cash Ledger, usable for payment of tax liability.