PAYMENT

OF
TAXES
UNDER
GST

SUBMITTED BY: SUBMITTED TO:

Akshit Sharma Dr. Abha

Roll No – 185/15

BCom LLb

Section D
WHAT IS GST?

The Central government passed four sets of GST Acts in the Budget session this year. These
were Central GST Act, 2017; Integrated GST Act, 2017; Union Territory GST Act, 2017 and
GST (Compensation to States) Act, 2017. The Acts were approved by the Parliament after
they were introduced as part of the Money Bill. Following the passage of the GST Acts, the
GST Council decided the rate slabs for the Goods and Services to be taxed under the GST
regime.

GST (Goods and Services Tax) is the biggest indirect tax reform of India. GST is a single tax
on the supply of goods and services. It is a destination based tax. GST has subsumed taxes
like Central Excise Law, Service Tax Law, VAT, Entry Tax, Octroi, etc.

GST is a comprehensive indirect tax levy on manufacture, sale and consumption of goods as
well as services at the national level. It has replaced all indirect taxes levied on goods and
services by states and Central. Businesses are required to obtain a GST Identification Number
in every state they are registered. GST is expected to bring together state economies and
improve overall economic growth of the nation.

WHAT ARE THE 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 centre)

 CGST – To be paid when making supply within the state (paid to centre)
 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. For example –A government agency
gives a road laying contract to a builder. The contract value is Rs 10 lakh. When the
government agency makes payment to the builder TDS @ 1% (which amounts to Rs
10,000) will be deducted and balance amount will be paid.

 Tax Collected at Source (TCS) – TCS or Tax Collected at Source is a mechanism

where the receiver extracts a certain amount as tax of the payer and deposits the same
with the government. For example A is selling a Motor Car worth 12 Lakhs,
A is liable to collect TCS @ 1% on the sale consideration and deposit the same with
Govt. B pays 12.12 Lakhs (12 Lakhs + 1%).
TCS is mainly for e-commerce aggregators. It means that any dealer selling through
e-commerce will receive payment after deduction of TCS @ 2%.

WHO SHOULD MAKE THE PAYMENTS?

These dealers are required to make GST payment –

1. A Registered dealer is required to make GST payment if GST liability exists.

2. Registered dealer required to pay tax under Reverse Charge Mechanism (RCM).
3. E-commerce operator is required to collect and pay TCS
4. Dealers required deducting TDS.

WHAT ARE THE ELECTRONIC LEDGERS?

These ledgers are maintained on the electronically on GST Portal. Electronic Ledgers
or E-Ledgers are statements of cash and input tax credit in respect of each registered
taxpayer. In addition, each taxpayer shall also have an electronic tax liability register.
Once a taxpayer is registered on Common Portal (GSTN), 2 e-ledgers (Cash & Input
Tax Credit) and an electronic tax liability register will be automatically opened and
displayed on his dashboard at all times.
Rule 86 talks about electronic credit ledger and Rule 87 talks about electronic cash ledger.

SECTION 49 of CGST ACT talks about the Payment of tax, penalty, interest and other
amount. Every deposit made by a taxable person by internet banking or by using debit/credit
or by NEFT or RTGS or by any other mode, shall be credited to electronic cash edger of such
person.

Section 53 of CGST act defines the input tax credit as self-assessed in the return of a
taxable person shall be credited to his electronic credit ledger. Input credit means at the time
of paying tax on output, you can reduce the tax you have already paid on inputs.

Say, you are a manufacturer –

Tax payable on output (FINAL PRODUCT) is Rs 450
Tax paid on input (PURCHASES) is Rs 300
You can claim INPUT CREDIT of Rs 300 and you only need to deposit Rs 150 in taxes.

Under section 49 (7) the amount of input tax credit available in the electronic credit ledger of
the registered person on account of––

 (a) integrated tax shall first be utilised towards payment of integrated tax and the
amount remaining, if any, may be utilised towards the payment of central tax and
State tax, or as the case may be, Union territory tax, in that order;
  (b) the central tax shall first be utilised towards payment of central tax and the
amount remaining, if any, may be utilised towards the payment of integrated tax;
 (c) the State tax shall first be utilised towards payment of State tax and the amount
remaining, if any, may be utilised towards payment of integrated tax;
 (d) the Union territory tax shall first be utilised towards payment of Union territory
tax and the amount remaining, if any, may be utilised towards payment of
integrated tax;
 (e) the central tax shall not be utilised towards payment of State tax or Union
territory tax; and
 (f) the State tax or Union territory tax shall not be utilised towards payment of
central tax.

RULE 85 of GST – Electronic liability register

All liabilities a taxable person under this act shall be recorded and maintained in an
electronic liability register as may be prescribed under of same act. The electronic liability
register specified under subsection (7) of section 49 shall be maintained in FORM GST
PMT-01 for each person liable to pay tax, interest, penalty, late fee or any other amount on
the common portal and all amounts payable by him shall be debited to the said register.

RULE 88 of GST – Identification number of each transaction

(1) A unique identification number shall be generated at the common portal for each debit or
credit to the electronic cash or credit ledger, as the case may be.
(2) The unique identification number relating to discharge of any liability shall be indicated
in the corresponding entry in the electronic liability register.
(3) A unique identification number shall be generated at the common portal for each credit in
the electronic liability register for reasons other than those covered under sub-rule (2).

SECTION 51 of GST : TDS (TAX DEDUCTED AT SOURCE)

TDS stands for tax deducted at source. As per the Income Tax Act, any company or person
making a payment is required to deduct tax at source if the payment exceeds certain threshold
limits. TDS has to be deducted at the rates prescribed by the tax department.

The company or person that makes the payment after deducting TDS is called a deductor and
the company or person receiving the payment is called the deductee. It is the deductor’s
responsibility to deduct TDS before making the payment and deposit the same with the
government. TDS is deducted irrespective of the mode of payment–cash, cheque or credit–
and is linked to the PAN of the deductor and deductee.

The amount deducted as tax under this section shall be paid to the Government by the
deductor within ten days after the end of the month in which such deduction is made, in such
manner as may be prescribed.
The deductor shall furnish to the deductee a certificate mentioning therein the contract value,
rate of deduction, amount deducted, amount paid to the Government and such other
particulars in such manner as may be prescribed.
If any deductor fails to furnish to the deductee the certificate, after deducting the tax at
source, within five days of crediting the amount so deducted to the Government, the
deductor shall pay, by way of a late fee, a sum of one hundred rupees per day from the day
after the expiry of such five days period until the failure is rectified, subject to a maximum
amount of five thousand rupees.
The deductee shall claim credit, in his electronic cash ledger, of the tax deducted and
reflected in the return of the deductor furnished under sub-section (3) of section 39, in such
manner as may be prescribed.
If any deductor fails to pay to the Government the amount deducted as tax under sub-section
(1), he shall pay interest in accordance with the provisions of sub-section (1) of section 50, in
addition to the amount of tax deducted.

However, individuals are not required to deduct TDS when they make rent payments or pay
fees to professionals like lawyers and doctors.

TDS is one kind of advance tax. It is tax that is to be deposited with the government
periodically and the onus of the doing the same on time lies with the deductor. For the
deductee, the deducted TDS can be claimed in the form of a tax refund after they file their
income tax return.

SECTION 52 of GST : TCS (TAX COLLECTED AT SOURCE)

Tax Collected at Source (TCS) is an income tax, collected by the seller of a specified goods,
from the buyer at the time of sale of such goods. TCS is a concept where a person selling
specific items is liable to collect tax from a buyer at a prescribed rate and deposit the same
with the Government.
Let’s take an example to understand the concept of TCS:
Ram purchases scrap from Yash for Rs. 10,000. Here, as per the provisions of TCS Ram
would be liable to pay Rs. 10,100 to Yash ( Rs. 10,000 for Scrap and Rs. 100 as TCS at the
rate 1% on Rs. 10,000).

HOW TO MAKE GST PAYMENT?

GST payment can be made in 2 ways –

 Payment through Credit Ledger –

The credit of ITC can be taken by dealers for GST payment. The credit can be taken only for
payment of Tax. Interest, penalty and late fees cannot be paid by utilizing ITC.

 Payment through Cash Ledger –

GST payment can be made online or offline. The challan has to be generated on GST Portal
for both online and offline GST payment.

Where tax liability is more than Rs 10,000, it is mandatory to pay taxes Online.

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. It’s possible to pay 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 cannot 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 a CPIN?
CPIN stands for Common Portal Identification Number (CPIN) given at the time of
generation of challan. It is a 14 digit unique number to identify the challan. As
stated above, the CPIN remains valid for a period of 15 days.

SECTION 50 of CGST ACT

Interest on delayed payment of tax

(1) Every person who is liable to pay tax in accordance with the provisions of this Act or the
rules made thereunder, but fails to pay the tax or any part thereof to the Government within
the period prescribed, shall for the period for which the tax or any part thereof remains
unpaid, pay, on his own, interest at such rate, not exceeding eighteen per cent., as may be
notified by the Government on the recommendations of the Council.
(2) The interest under sub-section (1) shall be calculated, in such manner as may be
prescribed, from the day succeeding the day on which such tax was due to be paid.
(3) A taxable person who makes an undue or excess claim of input tax credit under sub-
section (10) of section 42 or undue or excess reduction in output tax liability under sub-
section (10) of section 43, shall pay interest on such undue or excess claim or on such undue
or excess reduction, as the case may be, at such rate not exceeding twenty-four per cent., as
may be notified by the Government on the recommendations of the Council.
What is the penalty for non-payment or delayed payment?
Late filing attracts penalty called late fee. The late fee is Rs. 100 per day per Act. So it is 100
under CGST & 100 under SGST. Total will be Rs. 200/day*. The maximum is Rs. 5,000. There
is no late fee on IGST in case of delayed filing.

Along with late fee, interest has to be paid at 18% per annum. It has to be calculated by the
taxpayer on the tax to be paid. The time period will be from the next day of filing to the date
of payment.

If you don’t file any GST return then subsequent returns cannot be filed. For example, if GSTR-2
return of August is not filed then the next return GSTR-3 and subsequent returns of September cannot
be filed. Hence, late filing of GST return will have a cascading effect leading to heavy fines and
penalty

An offender not paying tax or making short payments must pay a penalty of 10% of the tax
amount due subject to a minimum of Rs. 10,000.

Consider — in case tax has not been paid or a short payment is made, a minimum penalty of
Rs 10,000 has to be paid. The maximum penalty is 10% of the tax unpaid.

The Joint Commissioner of SGST/CGST (or a higher officer) may have reasons to believe that in
order to evade tax, a person has suppressed any transaction or claimed excess input tax credit etc.
Then the Joint Commissioner can authorize any other officer of CGST/SGST (in writing)
to inspect places of business of the suspected evader.
 BIBLIOGRAPHY
1. https://cleartax.in/
2. Dhingra Joy, understanding the basics of GST, 2018
3. THE CENTRAL GOODS AND SERVICES TAX ACT, 2017