Under the GST, every registered regular taxpayer must calculate his tax burden monthly by deducting the Input Tax Credit(ITC) from the Outward Tax Liability.
A composition taxable person who pays tax quarterly through form CMP-08 and a regular taxpayer who opts into the Quarterly Return filing and Monthly Payment of tax (QRMP) system and may select between the fixed sum and self-assessment methods of tax calculation are the exceptions. Any remaining tax liability after the ITC is deducted must be paid to the government through GST online payment.
Every taxpayer is expected to keep three ledgers as defined by the government. You can search the arn status for GST application numbers throughout India. Enter your ARN number below to see the application status of your GSTIN/UIN.
Applicants may check the arn status for GST on the progress of their GST Registration application and determine if they are now in the “GST Status” or the “GST Application Status.”
Electronic cash ledger
On the GST site, an electronic cash ledger will also be kept. It will reflect the entire amount deposited by the taxpayer to satisfy his tax due, plus any applicable interest, late fees, or penalties. Firms that make payments above Rs 10,000 must now do it online. To learn more about GST, see our Guide on GST Payment Form PMT-06.
Form PMT-09 permits a GST-registered person to move any available tax, interest, penalty, etc., from the electronic cash ledger to the corresponding tax or cess head, such as IGST, CGST, or SGST.
Electronic ledger of credit
The computerized credit ledger will record all taxes paid on inputs. In each of the following instances, the input tax credit must also be sent to the automated credit ledger:
- ITC is available for the amount of credit transferred through ISD.
- If the taxpayer submitted for registration within 30 days of being liable to pay tax, ITC granted on inputs kept in inventory and semi-finished or completed items would be deposited to the electronic credit ledger.
- A taxpayer in the composition scheme who converts to a regular taxpayer must transfer the ITC available on the inputs kept in stock and semi-finished or completed items to the computerized credit ledger.
- ITC available due to taxes paid using the reverse charge method must also be sent to the electronic credit ledger.
- ITC offered on goods/services used for business and other reasons should only be authorized for business purposes.
- All GST online payment must be made using the available input tax credit from the electronic credit ledger or the electronic cash ledger.
How do tax payments occur?
Regular Tax: Either ITC or cash may be used to make payment.
Interests and fines: Cash is the only accepted form of payment, and ITC adjustments are not permitted.
Utilization of ITC to satisfy the tax obligation
IGST: After the IGST input tax credit is used to pay IGST, the residual ITC may be applied to the payment of CGST and SGST tax liabilities.
CGST: The CGST input tax credit cannot be used to the SGST obligation but may be applied to the CGST liability. In addition, the remaining CGST credit may be utilized to satisfy the IGST debt.
SGST: The SGST input tax credit cannot be used for the CGST obligation, but it may be applied to the SGST liability. In addition, the remaining SGST credit may be utilized to satisfy the IGST debt.
Interest incurred on late payments.
According to Section 50 of the CGST Act, interest will accrue on a late payment the day after the due date. Interest payments are automatic and should be paid freely through GST online payment, even without a demand. The government will establish the interest rate, which cannot exceed 18 percent, based on the advice of the GST Council.
If an erroneous or excessive ITC claim or an erroneous or excessive decrease in production tax obligation, interest should be paid at a higher rate, not to exceed 24 percent, as determined by the government.