Payment of Tax, Interest,

Penalty and Other Amounts

SECTION 49
 ELECTRONIC CASH LEDGER
Sec 49(1)

- Every deposit made by a Person towards;

- Tax, interest, penalty, fee or any other amount;
- By using Credit card/Debit Card/NEFT/RTGS/any other prescribed mode;
- Shall be credited to the Electronic Cash Ledger of that Person.

- Electronic Cash Ledger shall be maintained in such manner as may be prescribed.

- The deposits made as mentioned above shall be credited to Electronic Cash Ledger subject to such
conditions and restrictions as may be prescribed.

Author’s Note
It means that Govt. may impose certain conditions/restrictions on the compliance of which only, the
above-mentioned deposits shall be credited to Electronic Cash Ledger.
 Extract of Notification No. 29/2019 dated 28th June 2019
Related Notification

As per N. No. 29/2019 dated 28th June 2019:-

- Every Registered Person;
- Who is required to furnish return in Form GSTR 3B;
- Shall;
- Discharge his liability towards tax, interest, penalty, fees or any other amount payable under this
Act;
- By;
- Debiting the Electronic Cash Ledger or Electronic Credit Ledger, as the case may be;
- Not later than the last date, on which he is required to furnish the said return.

Author’s Note
As per the above notification, it is clarified that depositing cash in Electronic Cash Ledger
will not automatically discharge the liability. The Registered Person has to debit its
Electronic Cash Ledger/Electronic Credit Ledger to discharge the liability.
 ELECTRONIC CREDIT LEDGER
Sec 49(2)

- Every Registered Person must self-assess its ITC.

- Such Self Assessment needs to be done in the return.
- The ITC self assessed by the Registered Person in the return shall be credited to his Electronic
Credit Ledger, in accordance with section 41.

- Electronic Credit Ledger shall be maintained in such manner as may be prescribed.

Author’s Note
Section 41 deals with :-
- Self Assessment of ITC.
- Conditions & Restrictions subject to which eligible ITC can be availed.
- Reversal of ITC along with interest in cases where supplier fails to make the payment of tax on
supplies of goods/services in respect of which ITC has been availed.
 UTILIZATION OF ELECTRONIC CASH LEDGER
Sec 49(3)

The amount available in the Electronic Cash Ledger may be used for making any payment towards
- Tax,
- Interest,
- Penalty,
- Fees or
- Any other amount payable under this Act/Rules

1. This utilization of Electronic Cash Ledger shall be done in such manner as may be prescribed.
2. This utilization of Electronic Cash Ledger shall be subject to such conditions as may be
prescribed.
3. This utilization of Electronic Cash Ledger shall be within such time as may be prescribed.
 UTILIZATION OF ELECTRONIC CREDIT LEDGER
Sec 49(4)

The amount available in the Electronic Credit Ledger may be used for making any payment towards
- Output Tax under CGST Act or
- Output Tax under IGST Act

1. This utilization of Electronic Credit Ledger shall be done in such manner as may be prescribed.
2. This utilization of Electronic Credit Ledger shall be subject to such conditions as may be
prescribed.
3. This utilization of Electronic Credit Ledger shall be subject to such restrictions as may be
prescribed.
4. This utilization of Electronic Cash Ledger shall be within such time as may be prescribed.

Section 2 (82)
“Output Tax” in relation to a Taxable Person, means :-
- The Tax chargeable under this Act on;
- Taxable supply of goods or services or both;
- Made by him or by his agent.
Output Tax excludes tax payable by him on Reverse Charge Basis.
 Extract of Circular No. 172/04/2022 dated 6th July 2022
(Related Circular)

Whether the 1. As per Sec 49(4) of CGST Act, the amount available in Electronic Credit Ledger may be used for making any
amount payment towards output tax under CGST Act or IGST Act.
available in the 2. The order of utilization of Input Tax Credit is laid down in Section 49B read with Rule 88A.
Electronic 3. Rule 86(2) also provides for debiting Electronic Credit Ledger in accordance with Section 49 or 49A or 49B of
Credit Ledger CGST Act.
can be used for 4. Output Tax is defined u/s 2(82).
making 5. Accordingly, it is clarified that any payment towards Output Tax, whether self assessed in the return or payable
payment of any as a consequence of any proceeding instituted under GST Laws, can be made by utilizing Electronic Credit
tax under the Ledger.
GST Laws? 6. It is further clarified that since output tax does not include tax payable under RCM, therefore Electronic Credit
Ledger can’t be used for making payment of any tax which is payable under RCM.

Whether the 1. As per Sec 49(4) of CGST Act, the amount available in Electronic Credit Ledger may be used for making any
amount payment towards output tax only under CGST Act or IGST Act.
available in the 2. Therefore, it can’t be used for making payment of any- a) interest, b) penalty, c) fees or d) any other amount
Electronic payable under GST Laws.
Credit Ledger 3. It is also clarified that Electronic Credit Ledger can’t be used for payment of erroneous refund sanctioned to
can be used for the taxpayer, where such refund was sanctioned in cash.
making
payment of any
liability other
than tax under
the GST Laws?
 MANNER OF UTILIZATION OF ITC
Sec 49(5)

Section 49(5) provides the manner of utilization of ITC on account of IGST, CGST and
SGST/UTGST.
ITC on
account of Manner of Utilization
1. It shall first be utilized towards payment of IGST.
2. Any amount remaining, if any, may be utilized towards the payment of CGST.
IGST 3. Any amount remaining thereafter, if any, may be utilized towards the payment of SGST/UTGST.

Note- It is mandatory that ITC on account of IGST should be utilized in this order only.

1. It shall first be utilized towards payment of CGST.

CGST 2. Any amount remaining, if any, may be utilized towards the payment of IGST.
1. It shall first be utilized towards payment of SGST.
SGST 2. Any amount remaining, if any, may be utilized towards the payment of IGST.
1. It shall first be utilized towards payment of UTGST.
UTGST 2. Any amount remaining, if any, may be utilized towards the payment of IGST.
 Section 49(5) also provides for certain other conditions for utilization of ITC on account of IGST,
Sec 49(5)
CGST and SGST/UTGST.
ITC on
account of Other Conditions

CGST 1. ITC on account of CGST shall not be utilized towards payment of SGST/UTGST.

1. ITC on account of SGST shall be utilized towards payment of IGST only where the balance of ITC on
SGST account of CGST is not available for payment of IGST.
2. ITC on account of SGST shall not be utilized towards payment of CGST.

1. ITC on account of UTGST shall be utilized towards payment of IGST only where the balance of ITC on
UTGST account of CGST is not available for payment of IGST.
2. ITC on account of UTGST shall not be utilized towards payment of CGST.

Author’s Note
Section 49(5) provides for manner of utilization if ITC on account of IGST,CGST and SGST/UTGST.
However, in this section, it is not clarified that which ITC has to be utilized first. Therefore, it may be
possible that some taxpayers may first utilize the ITC on account of CGST and some taxpayers may
first utilize the ITC on account of SGST and some taxpayers may first utilize the ITC on account of
IGST.
To clarify this, Govt. further introduced section 49A, 49B and Rule 88A.
 Section/
Sec 49(5) Rule Provision

 Notwithstanding anything contained in section 49, the ITC on account of CGST/SGST/UTGST shall be
Section 49A utilised towards payment of IGST,CGST,SGST/UTGST, as the case may be,
 Only after the ITC available on account of IGST has first been utilised fully towards such payment.

Notwithstanding anything contained in this Chapter and subject to the provisions of section 49(5)(e) & 49(5)
(f), the Government may, on the recommendations of the council, prescribe the order & manner of utilization of
the ITC on account IGST, CGST, SGST/UTGST, as the case may be, towards payment of any such tax.
Section 49B
Section 49(5)(e) & 49(5)(f) prohibits cross utilization of CGST & SGST/UTGST input against SGST/UTGST
&CGST output tax.

Rule 88A prescribes the order of utilization of ITC. As per it:-

 ITC on account of IGST shall first be utilized towards payment of IGST, and the amount remaining, if any,
Rule 88A may be utilized towards the payment of CGST and SGST/UTGST, as the case may be, in any order.
 Provided that the ITC on account of CGST,SGST/UTGST shall be utilized towards payment of IGST, CGST,
SGST or UTGST, only after the ITC available on account of IGST has first been utilized fully.

Author’s Note
Since Rule 88A has an overriding effect over the Chapter 10 “Payment of Tax”, therefore, for
identifying the manner of utilization of ITC, Rule 88A should be given priority along with section
49(5).
 REFUND OF BALANCE LYING IN ELECTRONIC CASH/CREDIT LEDGER
Sec 49(6)

 The balance in Electronic Cash Ledger or Electronic Credit Ledger;

 After payment of tax, interest, penalty, fee or any other amount payable under this Act or Rules;
 May be refunded;
 In accordance with the provisions of Section 54.

Author’s Note
The refund of unutilized ITC shall be allowed only in following 2 cases:-
 Zero Rated Supply
 Inverted Duty Structure
 ELECTRONIC LIABILITY REGISTER
Sec 49(7)

 All liabilities of a Taxable person under this Act;

 Shall be recorded and maintained;
 In an Electronic Liability Register.

- Electronic Liability Register shall be maintained in such manner as may be prescribed.

 ORDER OF DISCHARGING TAX/OTHER DUES
Sec 49(8)

Every Taxable Person shall discharge his Tax & Other Dues under this Act/Rules in the following
order; -
 Self Assessed Tax and Other Dues related to the returns of Previous Tax Periods.
 Self Assessed Tax and Other Dues related to the returns of the Current Tax Period.
 Any other amount payable under this Act/Rules including the demand u/s 73 or u/s 74.

Explanation to Section 49
 “Tax Dues” means the tax payable under this Act and does not include interest, fee & penalty.
 “Other Dues” means interest, penalty, fee or any other amount payable under this Act/Rules.
 The date of credit to the account of the Government in the authorized bank shall be deemed to be the
date of deposit in the Electronic Cash Ledger.
 GENERAL ASSUMPTION- BURDEN OF TAX PASSED ON TO THE RECIPIENT
Sec 49(9)

 It is generally assumed that Every Person who has paid the tax under this Act shall have passed on
the full incidence of such tax to the Recipient.

 However, such assumption does not hold good if the Person proves anything contrary .
 TRANSFER OF AMOUNT FROM ONE ELECTRONIC CASH LEDGER TO OTHER
Sec 49(10) ELECTRONIC CASH LEDGER

A Registered Person may, on the common portal, transfer any amount of tax, interest, penalty, fee or
any other amount available in the Electronic Cash ledger, to the Electronic Cash Ledger for: -
 IGST (tax),CGST (tax),SGST (tax),UTGST (tax) or Cess (tax); or
 IGST (tax) or CGST (tax) of a distinct person as specified u/s 25(4) or 25(5),

In such form & manner and subject to such conditions & restrictions as may be prescribed.

 Such transfer shall be deemed to be a refund from Electronic Cash Ledger under this Act.
 Provided that no such transfer under clause (b) shall be allowed if the said registered person has
any unpaid liability in his Electronic Liability Register.

Author’s Note
Section 49(10) is explained in coming slides in a layman language.
 TRANSFER OF AMOUNT FROM ONE ELECTRONIC CASH LEDGER TO OTHER
Sec 49(10) ELECTRONIC CASH LEDGER

First, we must understand about Major Heads and Minor Heads in payment challan.

 All the Heads shown on the left side vertically i.e., CGST, IGST, Cess & SGST are known as Major
Heads.
 All the Heads shown on top as Horizontal i.e., Tax, Interest, Penalty, Fees & Other are known as
Minor Heads.
 An Amount lying in any Minor Head of a particular Major Head can be utilized against any other
Minor Head of that Major Head.
 However, An Amount lying in any Minor Head of a particular Major Head can’t be utilized against
any Minor Head of any other Major Head.
 TRANSFER OF AMOUNT FROM ONE ELECTRONIC CASH LEDGER TO OTHER
Sec 49(10) ELECTRONIC CASH LEDGER
Transfer within same GSTN Transfer to GSTN of Distinct Entity
An amount lying in any Minor Head of a particular An amount lying in any Minor Head of a particular
Major Head can be transferred to Minor Head “Tax” of Major Head can be transferred to Minor Head “Tax” of
any other Major Head. Major Head “IGST” or “CGST” of the distinct person.
It can’t be transferred to Major Head “SGST” of the
For Example distinct person
An amount lying in Minor Head “Fees” of Major Head
“CGST” can be transferred to- For Example
a) Minor Head “Tax” of Major Head “IGST” or An amount lying in Minor Head “Fees” of Major Head
b) Minor Head “Tax” of Major Head “SGST” or “SGST” can be transferred to-
c) Minor Head “Tax” of Major Head ‘Cess”. a) Minor Head “Tax” of Major Head “IGST” of the
distinct person or
However, it can’t be transferred to any other Minor Head b) Minor Head “Tax” of Major Head “CGST” of the
of IGST, SGST or Cess. distinct person or
However, it can’t be transferred to any other Minor Head
of IGST or CGST of the distinct person.
It can also not be transferred to any Minor Head of Major
Head “SGST” of the Distinct Person.
 TRANSFER TO ELECTRONIC CASH LEDGER = DEPOSIT IN THE SAID LEDGER
Sec 49(11)

 Where any amount has been transferred to the Electronic Cash Ledger under this Act,
 The same shall be deemed to be deposited in the said ledger as provided in section 49(1).
 TRANSFER TO ELECTRONIC CASH LEDGER = DEPOSIT IN THE SAID LEDGER
Sec 49(12)

 Notwithstanding anything contained in this Act,

 The Government may specify;
 Such maximum proportion of output tax liability under CGST Act/IGST Act;
 Which may be discharged through the Electronic Credit Ledger;
 By a Registered Person or a class of Registered Persons.

 The same shall be done on the recommendation of the council.

 The same shall be subject to such conditions as may be prescribed.
 The same shall be subject to such restrictions as may be prescribed.