GST payments need to made monthly by all GST registered businesses every month. As per current GST rules, GST returns need to be filed every month and payment of GST dues also need to be completed every month after taking into account any applicable input tax credit which is declared in the GSTR-3B. Under the existing GST rules, GST payments for the month have to be made by the 20th of next month i.e. GST payments for December 2018 will have to be made by the 20th of January 2019.
Types of GST Payments
Under the GST Act, the applicable types of GST Payments are – CGST, SGST and IGST. The following are some of the key criteria for making the different types of GST payments:
|Type of GST Payment||Conditions for Payment||Receiver of Taxes|
|IGST||Interstate supply of goods/services||Central Government|
|CGST||Supply within the same state||Central Government|
|SGST||Supply within the same state||State Government|
In a majority of cases, the supplier of goods/services pays GST to the government and recovers charge at the applicable rate from the receiver. In relatively fewer cases, the buyer pays the GST directly to the government (instead of the seller). The process by which GST liability of the supplier is shifted to the receiver of goods/services is termed as the reverse charge mechanism.
Calculation of GST Payments
The GST payments to be made by a supplier/receiver depends on a few key factors:
- Gross GST Liability – This is the gross GST liability of the registered business/individual
- TDS (Tax Deducted at Source) – By using TDS mechanism, the dealer deducts tax before making payment to the supplier. TDS, if paid, is deducted from Gross GST liability.
- TCS (Tax Collected at Source) – The TCS mechanism is commonly used by e-commerce aggregators on sales made through their website. TCS, if paid, is deducted from the Gross GST liability.
- ITC (Input Tax Credit) – This is a special mechanism introduced under GST which can be availed by registered businesses/individuals to decrease their overall tax burden. By implementation of ITC, the GST burden on a supplier’s output is decreased to the extent GST has been paid on inputs purchased by the registered business/individual.
Thus, Net GST Payable = Gross GST – (TDS/TCS+ITC)
Electronic Ledgers for GST Payments
Payments and refunds in the GST portal are managed through 3 types of electronic ledgers. These can be accessed by GST registered businesses/individuals when they log into their account on the Official GST portal. The following are some additional details of these electronic GST ledgers:
- Cash Ledger: This ledger contains details of all deposits made by the taxpayer including cash deposits, TCS/TDS transactions made on behalf of the GST registered person/business by others. The cash ledger balance can be used to make various GST-related payments.
- Credit Ledger: The GST credit ledger primarily reflects details of ITC i.e. input tax credit applicable to the registered business/individual. The credit balance in this ledger can be utilized only for making tax payments related to GST. The balance cannot however be utilized for payment of penalties, late fees or interest.
- Liability Ledger: This electronic GST ledger contains details of the total tax liability of the registered business/individual for the specific month. This ledger will also contain any late payment charges/interest that may be applicable to the taxpayer. This along with details of the other ledgers can be accessed and viewed from the GST tax payer’s dashboard.
Making GST Payments
As per existing provisions of the GST Act, once the net GST payable is displayed in the liability ledger of the GST registered taxpayer, the due amount can be paid in two ways:
1) Using balance in the Credit Ledger: A GST registered business/individual can make GST payment using the credit ledger balance available in lieu of input tax credit received. This balance cannot however be used for making other GST-related payments such as late fees, interest, etc.
2) Using Cash Ledger Balance: The taxpayer can also use cash ledger balance to pay GST dues via either the online route or the offline route. Under currently applicable rules, GST dues have to be mandatorily paid online if total tax payable is over Rs. 10,000. A GST payment challan is mandatory when making GST payments.
Penalties on Delayed GST Payment
Under current provisions of the GST Act, the GST payment for every month is due on the 20th of next month i.e. GST payable for the month of December 2018 has to be mandatorily paid by the 20th of January 2019. The following are the penalties applicable to late or short payment of GST:
- In case of late GST payment, late fees are applicable at the rate of Rs. 200 per day (Rs. 100 for late CGST + Rs. 100 for late SGST payment). There is however no late payment fee for late IGST payment. The late fee applicable in this case is capped at Rs. 5000.
- Apart for the late fee, interest charges are also applicable on the unpaid tax at 18% p.a. The taxpayer has to calculate these interest charges and pay them as applicable.
- Short payment of GST i.e. paying less taxes than owed as per GST computation feature a heftier fine. The penalty in such cases is the higher amount among Rs. 10,000 and 10% of GST short paid. Apart from this, the short paid amount also needs to be repaid along with applicable interest at 18% per annum. Know more about GST Penalties and Offences
A GST registered person/business may be eligible for a GST refund in case the tax paid exceeds the actual GST liability. Under GST rules, the process of claiming refunds has been standardized with time limits applicable to the submission of GST refund claims. The process of GST refunds is different from the process of ITC or input tax credit.
Reasons to Apply for a GST Refund
The following are some of the key reasons when a GST refund may be availed*:
- If an export supplier’s input tax credit (ITC) exceeds GST payable or in case of a claim of rebate on exports.
- In case excess tax was paid by mistake by the GST registered taxpayer.
- In case there is pending balance in the GST credit ledger due to zero tax or tax exempt.
- By foreign embassies and UN bodies when purchases are made by them in India.
- By foreign tourists who are subject to GST refund.
- In case credits/discounts are received by supplier due to issue of credit notes.
- In case refund is due after finalization of provisional assets.
*The above list is indicative and there may be other instances where GST refunds are issued.
GST Refund Filing Time Limit
Under existing rules and provisions of the GST Act, the time limit to apply for a GST refund is 2 years calculated from the “relevant date”. The definition of this relevant date varies depending on the reason for issue of the GST refund. The following are some examples of “relevant date” depending on the reason for GST refund claim:
|Reason for GST Refund Claim||Relevant Date|
|Finalisation of provisional assessment||Date on which tax is adjusted|
|Export/Deemed Export of Goods||Date of dispatch/passing over border/loading|
|Excess tax paid||Date of tax payment|
|Refund for unutilized ITC||End of Financial Year for which refund is claimed|
|Refund due to order/judgement of courts||Date of issue of court order|
*The above list is indicative and there may be other instances where GST refunds can be claimed.
GST Refund Application Processing Times
Based on current norms, the processing time of a GST Refund application is 30 days from the day of filing the GST refund claim. In certain cases, the scrutiny of the refund application may take longer such as in cases when an audit is ordered for any reason.
Documents Required to Apply for GST Refund
The following is a list of key documents that are required when claiming GST refund*:
- Form GST RFD 01: This document is available on the Official GST Portal and can be filled out and submitted electronically through a notified Facilitation Centre or online through the common GST portal. The GST RFD-01 is the primary document that needs to be filled out and submitted in order to claim a GST refund.
- Copy of Order: Supporting documentary evidence is necessary if GST refund is due as a result of an order passed by an applicable appellate authority or court. The reference number of the order along with copy of the order needs to be provided along with refund application as documentary evidence.
- Statement of Shipping Invoices: If an export supplier claims GST refunds, a statement with date and number of shipping bills/bills of export along with copies of relevant export invoices needs to be provided as documentary evidence for refund claim.
- Statement of Invoices: In case the GST registered business supplies goods manufactured in a SEZ (special economic zone), the applicable documentary evidence of refunds is a statement containing the date and number of invoices.
- Copy of Final Assessment Order: A copy of the final assessment order along with reference number of assessment order needs to be provided if the GST refund is being processed due to finalization of provisional assessment.
- Form GST RFD 02: This form is essentially an acknowledgement that the application for a GST Refund has been filed and submitted using GST RFD 01. The GST RFD-02 is available from the common GST Portal and is automatically generated based on information provided by the taxpayer in GST RFD-01. It is important to note that the GST RFD-02 is only an acknowledgement of refund application receipt and does not guarantee that GST refunds will actually be provided to the taxpayer.
*The above list of documents is indicative and other documents may be required to process a GST refund claim depending on the type of applicant.
Calculation of GST Refund on Input Tax Credit
In case, refund is being provided based on the input tax credit receivable by the registered business/individual, the maximum permissible amount payable as GST refund is:
Refund = (Turnover of zero-rated services + turnover of zero-rated goods)*(Net Input Tax Credit)/Adjusted total turnover
In the above formula,
Refund = Maximum permissible refund for relevant period
Net ITC = Input tax credit availed by the taxpayer on various inputs/input services for relevant period
Adjusted Total Turnover = The value of turnover in a state excluding the value of exempt supplies for relevant period
Relevant Period = Period for which refund is being applied for
Interest on GST Refunds
If there has been a delay in crediting refund to the registered business/person based on GST payments made previously, the government is liable to pay interest on the refund amount outstanding at 6% per annum along with the refund itself. The applicability of GST refund is governed by Section 54 (section 12) and Section 56 of the GST Act, 2017. A higher interest rate on GST refunds at 9% is payable by the government under Section 56 if delayed refund is issued as a result of an order from an applicable appellate authority.
The details of the interest payable on GST refunds are provided to the taxpayer using Form GST RFD-05 which is prepared by the appropriate government authority. Key details included in the GST RFD-05 are the total amount, the period for which interest is payable on the refund and the total amount payable as interest. Under existing rules, interest is payable by the government only on the amount to be refunded and not on any unused input tax credit available in the taxpayer’s electronic ledger.