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GST Payments and Refunds

April 12, 2021

GST Payments And Refunds

GST Payments

GST payments denote the payments of good and services taxes which is paid for the transaction of goods and services within the country for domestic consumption. As we look into the payments, it's essential to touch upon GST refunds, which means that if a taxpayer pays more than his tax liability, he could reclaim the remaining payment as a refund.

There are mainly three categories of tax to be paid as GST payments: IGST, CGST, and SGST.

  • IGST  ( Integrated Goods and Services Tax ) is the first category of tax under GST which is paid to the central government for interstate transactions.
  • CGST ( Central Goods and Services Tax ) is the second category of tax under GST which is paid again to the central government for intrastate transactions.
  • SGST ( State Goods and Services Tax ) is another category of tax that is paid to the state for intrastate transactions.

In addition to IGST, CGST, and SGST, a taxpayer is required to pay TDS ( Tax Deducted at Source) and TCS ( Tax Collected at Source ).

  • Tax Deducted at Source (TDS): TDS is a Tax Deducted at Source which the tax would be deducted at the point of its source itself.

For example, if an employer is supposed to pay the salary to his employee which exceeds a limit. The employee could get his salary amount after deducting TDS if the salary exceeds a limit.

  • Tax Collected at Source (TCS): Tax collected at the source is a tax paid by the seller which is collected from the buyer. TCS is mainly for e-commerce platforms.
  • Reverse charge: Here the tax liability lies with the receiver, payments including interest, penalty, and fees.

How to Calculate GST Payment?

The total GST payment is calculated by deducting tax credit from outward tax liability. Besides, TCS/ TDS would be reckoned to ascertain a final figure.

It should be borne in mind that Input Tax Credit or ITC cannot be claimed for interest and fees paid overdue and the same has to be paid in liquid too.

The GST payment calculation is made according to the type of dealers. Mainly there are two types of dealers .i.e. Regular and composition dealers.

A regular dealer is to pay GST on his outward supply and he could claim ITC on his purchases. Whereas, a fixed percentage of GST is required to be paid by the composition dealer as per the composition scheme. Here, GST payment is also based on the mode of business of a composition leader. In the case of a manufacturer or traders, the total GST rate according to the composition scheme is 1% i.e. 0.5% for CGST and  0.5% for SGST.

The total rate for a restaurant that does not serve alcohol is 5%, as in the above-mentioned case, 2.5% for CGST, and 2.5% for SGST.

Who should make the GST Payment?

Dealers to be paid GST payment:

  • A registered dealer who is liable for GST payment and the registered dealer is to make the GST payment under Reverse Charge Mechanism in which charges or the payment received get reversed on the receiver.
  • A dealer utilizing an eCommerce platform should collect the tax and is liable to pay TCS.
  • Dealers deducting TDS.

Time to Make GST payment

GST payment should be made within a month .i.e. 20th of the next month is the period for the GST payment as it is to be done when the GSTR3 is filled.

What are Electronic Ledgers?

Electronic ledgers help a taxpayer to track his tax liabilities in the GST portal. There are three types of electronic ledgers as Electronic Liability ledger, Electronic credit ledger, and Electronic Cash ledger.

  • Electronic  Liability LedgerIt's an electronic register in the GST portal which records the taxpayers' gross tax liabilities such as tax, interest, late fees, etc.
  • Electronic Credit Ledger: It registers the taxes paid in the course of the supply chain. The claim regarding Input Tax Credit (ITC)   calculated by the taxpayer himself would be credited to the electronic credit ledger.
  • Electronic Cash Ledger: Electronic Cash Ledger is like an e-wallet and the GST payment made in liquid form via bank could be seen in Electronic Cash Ledger. 

Steps to Follow for Making GST Payment

GST payment could be processed either through a credit ledger or cash ledger. As Input Tax Credit available with the credit ledger could be used by the taxpayers for their GST payment except for interest, penalty, and late fees.

The GST via cash ledger could be paid either online or offline. Whether online or offline, a challan generated on the GST portal regarding the payment is required and if the taxpayer’s liability of payment is above 10,000, it could be processed only through online mode. Let us now examine how to Pay GST Payment Online?

Steps Details
Step 1 A registered taxpayer can log in to his account via the official GST website.
Step 2 After logging in successfully, click on the payment section which could be seen under the service head. From there choose to create challan.
Step 3 While creating the challan, you enter every amount in the required space. Then proceed to the payment method.
Step 4 After filling in all the particulars such as CGST, IGST, CESS, etc, you proceed to the ‘generate challan ‘ option. Unless you are sure about the details which you entered you could click the save option to retain it for future use and make adequate changes. . But hit the ‘generate challan’ option only after you are confirmed of not having any edits.
Step 5 After hitting the ‘ generate challan’ option, you could proceed directly to the GST payment. Then you can either choose direct payment via your nearest bank branch or online payment using net banking, debit card/ credit card or simply through NEFT/RTGS.
Step 6 No matter whatever payment mode you rely on,  you have to generate the payment receipt or final challan after your GST payment.  Keep the copy of the receipt as proof.

What is the Penalty for Non-Payment or Delayed GST Payment? 

It is to be noted that the penalty would be imposed for non-payment or delayed payment of GST accordingly.

  • The failure of a taxpayer to file the precise details regarding outward/ inward supplies or monthly return before the deadline would result in the imposition of 100 RS every day from the due date, which may go up to 5000 RS.
  • If it is in the case of filling annual return before the time limit, a penalty of 100 Rs for every day during which the failure continues and it would be a quarter per cent of the person’s turnover in his registered state.

As it comes to the late payment, a particular percentage of interest would be imposed accordingly.

  • If a taxpayer fails to pay tax, 18% of interest will have to be paid on the tax due from the first day of the due date.
  • While taxpayer proceeds with an undue or excess claim of ITC or excess reduction in output tax liability, 24% of interest on the undue or excess reduction.
  • When it is in the case of the service recipient, who fails to pay the value of the service along with the tax within 180 days after the date of invoice by the supplier, has to pay with an 18% of interest on the amount.

GST Refund

What is a GST Refund?

You are liable to claim a refund if you pay more than you are ought to pay. Standard procedures are there to claim a refund.

When can you Claim a Refund?

There are multiple occasions on which you could make your claim for a refund and the GST refund process would be followed accordingly. As per the GST refund rules, Excess payment of GST is the main reason for claiming the refund. In addition to that, the following should be read along with that:

  • On Account of services export -With Payment ofTax
  • On Account of Supplies made to SEZ Unit/ SEZ Developer -With Payment of Tax
  • Exports of Goods / Services - Without making tax Payment, i.e., Input tax credit (ITC Accumulated)
  • Input Tax Credit (ITC) Accrued due to InvertedTax Structure (clause (ii) section 54(3))
  • On account of Supplies made to SEZ Unit/ SEZ Developer (Without Payment of Tax)
  • On account of Refund due to Deemed Export
  • On account of Assessment /ProvisionalAssessment / Appeal
  • Excess payment of tax
  • Any other reason.

Refunds Not be Claimed in the following Scenarios

  • An exported goods, which are already subjected to export duty, can not claim a refund of an unutilized ITC.
  • If the supplier of goods and services is expected to get a refund from IGST on the supplies, a refund claim on ITC is not valid.
  • Taxpayers can’t get a refund on closing stocks.

How to Calculate GST Refund?

Its undoubtedly clear that the excess GST payment would be refunded. For instance, Your  GST Payment is 1 lakh and you paid 1.25 lakh by mistake.  Then you could claim a refund of 25K and that would be refunded within 2 years from the GST payment due date.

GST Refund process Time Limit

Two years from the date of payment is the  GST refund process time limit In addition to the refund, the interest could be paid accordingly. Besides,  valid dates vary in every case.

  • In the case of excess payment, it depends on the date of payment.
  • Apprised export of goods and services is based on the date of shipping/loading/passing.
  • The valid date for the Tax-exempt output related to ITC ( Input Tax Credit)  would be the end of the financial year where the credit belongs.
  • The provisional assessment finalization would be on an adjusted date.

How to Claim GST Refund?

The process of getting a refund under GST and GST refund rules is much easier than you think. You just need to fill Form RFD 01 within 2 years from the paid date and it should be accorded by a Chartered Accountant.







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