All you need to know about Tax Payments under GST

By Registrationwala

4th April 2017


Whenever there is a change induced in any economy, it leads to eyeballs rolling. And when the change is so big, like the GST, that it is expected to haul the way business is done, the anticipation grows several bounds. GST is a completely new system in place. Though it has been is use in about 140 countries in the world, it is still an alien concept for the Indian market where majority of businessmen are still uncertain about the taxation procedure. The following write-up seeks to answer every question that ever was regarding TAX PAYMENTS UNDER GST

Various payments to be made under GST

As and when the GST is implemented, any tax for intra-state supply will be classified into two categories. A) tax to be paid to the central government (CGST) and b) tax to be paid to the state government (SGST). Further for any inter-state supply the tax will be paid under IGST that will have components of both CGST and SGST. Apart from these, certain registered individuals will have to pay TDS (tax deducted at source) and TCS (tax collected at source). Also it does not account for interest and penalties. Hence whenever and wherever it is required.

Who will have to pay GST

In general terms, the supplier of goods or services is liable to pay GST. However, in certain exceptional cases as in the case of imports, the liability may also come upon the recipient. This is known as reverse charge mechanism. Also in some cases, the liability will be on the third person, like a government department will be liable to deduct TDS.

Salient features of GST payment process?

The payment procedure under GST is expected to be a smooth one. It will run roughly on this pattern.–

  • Challans will be electronically generated from a common GSTN portal for all modes of payment and there will be no manually prepared challan.
  • It will aid the tax payer’s comfort by providing him/her a hassle free, 24/7 mode of payment of tax, from any part of the country.
  • It will be convenient to make online payment
  • Collection of all tax data will be done logically online
  • Tax will be submitted to the government account at a much rapid rate.
  • As world prepares towards a greener planet, paper-less transactions will be definitely be a help.
  • Accounting and speeding will done at a rapid pace
  • Every receipt will be electronically reconciled
  • Process will get simplified for the banks
  • There will be a warehouse for digital challans

The process of doing payment in GST

Following are the methods by which you can do GST payment

Through various debit cards or credit cards of the tax payer that are maintained on the common portal. Note that the payment of only taxes can be done through it.

Entities like interest, penalty and fees will never be paid by debit in the credit ledger, though.

Also a tax payer will have the liberty to take credit of the taxes that he has paid on inputs (input tax credits) and use it for the payment of output tax. But it must be noted that no input tax credit on account of CGST will be allowed to be use for the payment of SGST and vice versa. However, the credit from the IGST will be allowed to be paid for the payment of IGST, CGST and SGST in the given order.

Through various ways, one can deposit in the cash ledger. These methods are

  1. E-Payment (Internet Banking, Credit Card, Debit Card)
  2. Real Time Gross Settlement (RTGS)/ National Electronic Fund Transfer (NEFT)
  3. Over the Counter Payment authorized bank branchesfor accepting deposit of GST.


Payment of the tax made by supplier

Any normal tax payer has to make the payment on a monthly basis on 20th of the following month. If there is cash payment, it has to be first deposited in the cash ledger and then while making the payment, the tax payer will debit the ledger. The payment can also be done via the credit Ledger. Quarterly payment needs to be done by the Composition tax payers. From 12 in the midnight to 8 next evening is what has been fixed as the timing for the payment.

Time limit of tax and instalments

No there is no clause of instalment payment in case of self-assessed tax. Although in other cases (as envisaged by section 55 of MGL), related authorities can extend the time period or allow payment in instalments.

Filing the return but not paying the tax

If a person files the return but does not pay the tax, the return is considered invalid. Section 27 (3) of the MGL says that the return furnished by a taxable person shall not be treated as valid return unless the taxpayer has paid the full tax by due date. Hence only the valid return that will be used for ITC to the recipient. To put it simply, if the taxpayer has not paid the entire self-assessed tax and filed the return, the ITC of the recipient will not be generated. Going further, section 28 says that any taxable person who fails to furnish a valid return will not be allowed to use any credit until he gets rid of the self-assessed tax liability.


Electronic Ledgers are statements of cash and input tax credit of every registered taxpayer. Apart from this ledger, the taxpayer should also have a tax liability ledger. The moment a taxpayer registers on the common portal, i.e. GSTN, 2 e-ledgers (Cash & Input Tax Credit) and an electronic tax liability register starts getting displayed on his dashboard.

Tax liability ledger

It reflects the total tax liability of the taxpayer, once the final netting is done.

Cash Ledger

The cash ledger reflects all the deposits that are made in cash, TDS/TCS made on account of the taxpayer. All this information is reflected on the real time basis.Any payment on account can be made using this ledger.

ITC Ledger

Any self-assessed Input Tax Credit on a monthly basis is reflected in the ITC Ledger. These credits in the ledger can be used to make payment of tax and no other amounts like interest, penalty, fees etc.

Link between GSTN and authorized banks

There is a two way link between GSTN and the Core Banking solution, commonly called CBS. Once the CPIN is generated, it automatically is routed to the Bank through an electronic channel for verification. And once the payment is received, electronic string for verification and receiving payment and a challan identification number (CIN) is to automatically sent by the Bank to the Common Portal confirming payment receipt. There is no manual intervention in the entire process, not even the cashier or the teller is not involved during the process.

Creating and modifying a GST challan

For the purpose of paying taxes, a taxpayer has been given the facility of generating a challan from the GSTN portal. All the particulars have to be filed by the tax payers in authorized person. Also it is not a one-time process and the user can save the half-filled challan and come back later to complete the process. A saved challan can be edited before the final filling. Once the user has finalized the challan, it gets generated. Those who want to take a hard copy have the option of getting it printed. But it must be kept in mind that once the challan is generated it cannot be modified or altered. If the taxpayer wants to modify the challan he has to edit it before finalizing. He can edit it as many times as he pleases but the process must be completed before generating the final copy of challan.

Validity period of a challan

Once a challan is generated, it remains valid for a period of 15 days and only after that it is purged from the system. Although, it must be noted that a taxpayer can generated as many challans as he wishes to according to his convenience.


Common Portal Identification Number, as known in common parlance, is a 14-digit number generated at the time of challan. This unique number serves the purpose of identifying the challan. This number stays valid for a maximum period of 15 days.

CIN and its relevance in GST

A 17-digit number that is a 14-digit CPIN added with 3-digit bank code is the CIN that is called Challan Identification Number. It is generated by the RBI or certain authorized banks whenever there is a payment made to a particular relevant account held within that bank. In many ways this acts and indication about the successful payment process. It means the amount was credit in the said account. The CIN is always communicated to the concerned payee and the GSTN by the banks.

Tax liabilities of preceding month and GST

Iftaxpayer has tax liability beyond the current return period, there is a certain order of payment, as envisaged by section 35(8), for those tax liabilities that go beyond the current period. During such situations, there needs to be a particular order of payment that has to be followed. First of all self-assessed tax and interest for the previous period is to paid, followed by self-assessed tax and interest for the current period. And in the end, any other amount that has to be paid, it includes those demands made under section 51. It is mandatory not drift from the said procedure.


Electronic Focal Point Branches (E-FPB) are authorized branches of bank that can collect the payment of GST. Each authorized bank can nominate just one branch as its E-FPB for whole of India and the E-FPB must open accounts under each major head for all governments. A rough estimate says that total 38 accounts (one each for CGST, IGST and one each for SGST for each State/Union territories government) need to be opened. Amounts received byE-FPB towards GST will be credited to the appropriate account held by such E-FPB. And it must be noted that for NEFT and RTGS transactions RBI will function as E-FPB.

TDS under GST

Section 37 of the MGL says that government and government undertakings and other notified entities making payment to supplier in excess have to deduct some tax. While the payment is done, the entity will deduct 1 percent of the total amount to be paid and remit it in the appropriate GST account.

Accounting for TDS while filing return

This process is expected to ease down the process. Any amount which was ever deducted as TDS will reflect in the electronic cash ledge of the supplier. The supplier can thus use this amount towards discharging his tax liability, interest fees and any other amount.

TDS deduction and GST

All the TDS deductors first need to get registered. This registration process is envisaged by section 19 read with schedule III of MGL.

  The TDS collected must be deposited into then concerned GST government account by the 10th of the next month.

Upon deduction a certificate must be issued to the deductee within 5 days. On failing to do so, a fine of 100 rupees per day up to 500 will be imposed upon the deductor.

Tax Collected at Source for GST

TCS will only be liable for the E-commerce sector that is supplying any good to a consumer. Under section 43C of the MGL (Model GST Law) every E-Commerce Operator will have to withhold certain percentage (the percentage is not final yet and will be recommended later by the GST council) which the sector is charging from the consumer. This entire amount must be deposited in the appropriate GST account by the 10th of the next month. The amount deposited as TCS will be reflected in the electronic cash ledger of the supplier.

Pre-registration of credit card in the GSTN portal for the GST payment

Any tax payer who intends to pay through his credit card will have to make sure that his/her credit card is pre-registered at the common GSTN portal on which the tax payment is to be done.There are efforts being made to take the banks in confidence for verifying the credit card from the service provider. Hence the payments done through credit card will be allowed without any monetary, easing the entire business process.


All you need to know about Tax Payments under GST