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8.62 INDIRECT TAXES

9. A registered person paying tax under the provisions of section 10
[composition levy] shall issue, instead of a tax invoice, a bill of supply
containing such particulars and in such manner as may be prescribed
[Section 31(3)(c) read with CGST Rules, 2017].

Therefore, in the given case, Shyam Fabrics cannot issue tax invoice.
Instead, it shall issue a Bill of Supply.

10. Refer Para 3.

11. Refer Para 3.

12. Refer Para 4.

13. Refer Para 3.

14. Refer Para 3.

15. Refer Para 3.

16. Refer Para 3.

© The Institute of Chartered Accountants of India

TER

9CHAPTER

PAYMENT OF TAX

LEARNING OUTCOMES

After studying this Chapter, you will be able to –
 describe three kinds of ledgers to be maintained by the taxable

person- electronic cash ledger, electronic credit ledger and
electronic liability register.
 understand the methodology of cross utilization of credit.
 comprehend and apply the chronological order in which the
liability of a taxable person has to be discharged.
 identify and analyse the circumstances in which penal interest
is levied.
 understand the remedy available in case of tax wrongfully
collected and paid to Central/State Government.

© The Institute of Chartered Accountants of India

Payment of Tax 9.2 INDIRECT TAXES

Relevant Definitions

Electronic Cash Ledger

Electronic Credit Ledger

Electronic Liability Register

Interest on delayed payment of tax

Tax wrongfully collected & paid to the
Central/State Government

1. INTRODUCTION

In the GST regime, for any intra-state supply, taxes to be paid are the Central GST
(CGST), going into the account of the Central Government and the State/UTGST
(SGST), going into the account of the concerned State Government. For any inter-
state supply, tax to be paid is Integrated GST (IGST)
which will have components of both CGST and SGST.
In addition, certain categories of registered persons
will be required to pay to the government account Tax
Deducted at Source (TDS) and Tax Collected at Source

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PAYMENT OF TAX 9.3

(TCS)1. In addition, wherever applicable, interest, penalty, fees and any other
payment will also be required to be made.

The introduction of E-ledgers is a unique feature under the GST regime. Electronic
Ledgers or E-Ledgers are statements of cash and input tax credit in respect of each
registered taxpayer. In addition, each taxpayer shall also have an electronic tax
liability register. Once a taxpayer is registered on common portal (GSTN), two e-
ledgers (Cash & Input Tax Credit ledger) and an electronic tax liability register will
be automatically opened and displayed on his dash board at all times.

Chapter X of the CGST Act prescribes the provisions relating to payment of tax
containing sections 49 to 53. While section 49 discusses the three ledgers namely
the electronic cash ledger, electronic credit ledger and electronic liability register,
section 50 discusses about the interest on delayed payment of tax. Section 51 lays
down the circumstances in which tax deduction at source (TDS) becomes
mandatory. Section 52 deals with the circumstances when tax is to be collected at
source (TCS) by the Electronic Commerce Operator. Further, the manner of
utilization of ITC is laid down in section 53.

Chapter IX of CGST Rules deals with provisions relating to payment of tax.

Provisions of payment of tax under CGST Act have also been made applicable
to IGST Act vide section 20 of the IGST Act.

Before proceeding to understand the provisions of section 49, 50, 53 & the relevant
rules, let us first go through few relevant definitions.

2. RELEVANT DEFINITIONS

Agent means a person, including a factor, broker, commission agent, arhatia,
del credere agent, an auctioneer or any other mercantile agent, by whatever
name called, who carries on the business of supply or receipt of goods or

1 It may be noted that sections 51 & 52 dealing with provisions relating to TDS & TCS will be
dealt in detail at Final Level.

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9.4 INDIRECT TAXES

services or both on behalf of another [Section 2(5)].

Authorised bank shall mean a bank or a branch of a bank authorised by the
Government to collect the tax or any other amount payable under this Act [Section
2(14)].

Business includes

(a) any trade, commerce, manufacture, profession, vocation, adventure, wager
or any other similar activity, whether or not it is for a pecuniary benefit;

(b) any activity or transaction in connection with or incidental or ancillary to
sub-clause (a);

(c) any activity or transaction in the nature of sub-clause (a), whether or not
there is volume, frequency, continuity or regularity of such transaction;

(d) supply or acquisition of goods including capital goods and services in
connection with commencement or closure of business;

(e) provision by a club, association, society, or any such body (for a
subscription or any other consideration) of the facilities or benefits to its
members;

(f) admission, for a consideration, of persons to any premises;

(g) services supplied by a person as the holder of an office which has been
accepted by him in the course or furtherance of his trade, profession or
vocation;

(h) services provided by a race club by way of totalisator or a licence to book
maker in such club; and

(i) any activity or transaction undertaken by the Central Government, a State
Government or any local authority in which they are engaged as public
authorities [Section 2(17)].

Central Tax means the central goods and services tax levied under Section 9
[Section 2(21)].

Common portal means the common goods and services tax electronic portal
referred to in section 146 [Section 2(26)].

Council means the Goods and Services Tax Council established under article 279A
of the Constitution [Section 2(36)].

Electronic Cash ledger means the electronic cash ledger referred to in sub-
section (1) of Section 49 [Section 2(43)].

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PAYMENT OF TAX 9.5

Electronic Credit ledger means the electronic credit ledger referred to in sub-
section (2) of section 49 [Section 2(46)].

Integrated tax means the integrated goods and services tax levied under the
Integrated Goods and Services Tax Act [Section 2(58)].

Input tax in relation to a registered person, means the central tax, State tax,
integrated tax or Union territory tax charged on any supply of goods or services
or both made to him and includes—

the integrated goods and services tax charged on import of goods;

the tax payable under the provisions of sub-sections (3) and (4) of section
9;

the tax payable under the provisions of sub-section (3) and (4) of section 5 of
the IGST Act;

the tax payable under the provisions of sub-section (3) and sub-section (4)
of section 9 of the respective State Goods and Services Tax Act; or

the tax payable under the provisions of sub-section (3) and sub-section (4)
of section 7 of the Union Territory Goods and Services Tax Act,

but does not include the tax paid under the composition levy [Section 2(62)].

Input Tax Credit means the credit of input tax [Section 2(63)].

local authority means-

a “Panchayat” as defined in clause (d) of article 243 of the Constitution;

a “Municipality” as defined in clause (e) of article 243P of the Constitution;

a Municipal Committee, a Zilla Parishad, a District Board, and any other
authority legally entitled to, or entrusted by the Central Government or any
State Government with the control or management of a municipal or local
fund;

a Cantonment Board as defined in section 3 of the Cantonments Act, 2006;

a Regional Council or District Council constituted under the Sixth Schedule to
the Constitution;

a Development Board constituted under article 371 of the Constitution; or

a Regional Council constituted under article 371A of the Constitution. [Section
2(69)].

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9.6 INDIRECT TAXES

Notification means a notification published in the Official Gazette and the
expression “notify” and “notified” shall be construed accordingly [Section 2(80)].
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
but excludes tax payable by him on reverse charge basis [Section 2(82)].
Person includes:-
(a) an individual;
(b) a Hindu Undivided Family;
(c) a company;
(d) a firm;
(e) a limited liability Partnership;
(f) an association of persons or a body of individuals, whether incorporated or

not, in India or outside India;
(g) any corporation established by or under any Central Act, State Act, or

Provincial Act or a Government Company as defined in clause (45) of section
2 of the Companies Act,2013;
(h) any body corporate incorporated by or under the laws of a country outside
India;
(i) a co-operative society registered under any law relating to co-operative
societies;
(j) a local authority;
(k) Central Government or a State Government;
(l) society as defined under the Societies Registration Act,1860;
(m) trust; and
(n) every artificial juridical person, not falling within any of the above [Section
2(84)].
Recipient of supply of goods or services or both, means—
(a) where a consideration is payable for the supply of goods or services or
both, the person who is liable to pay that consideration;
(b) where no consideration is payable for the supply of goods, the person to
whom the goods are delivered or made available, or to whom possession
or use of the goods is given or made available; and

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PAYMENT OF TAX 9.7

(c) where no consideration is payable for the supply of a service, the person
to whom the service is rendered,

and any reference to a person to whom a supply is made shall be construed
as a reference to the recipient of the supply and shall include an agent
acting as such on behalf of the recipient in relation to the goods or services
or both supplied [Section 2(93)].

State Tax means the tax levied under any State Goods and Services Tax Act
[Section2(104)].

Supplier in relation to any goods or services or both, shall mean the person
supplying the said goods or services or both and shall include an agent acting
as such on behalf of such supplier in relation to the goods or services or both
supplied [Section 2(105)].

Taxable person means a person who is registered or liable to be registered under
Section 22 or section 24 [Section 2(107)].

Valid return means a return furnished under sub-section (1) of section 39 on
which self-assessed tax has been paid in full [Section 2(117)].

After going through the various definitions relevant to this Chapter, let us discuss
the provisions of Chapter X of the CGST Act.

3. PAYMENT OF TAX, INTEREST, PENALTY AND OTHER

AMOUNTS [SECTION 49]

STATUTORY PROVISIONS

Section 49 Payment of tax, interest, penalty and other amounts

Sub-Section Clause Particulars

(1) Every deposit made towards tax, interest, penalty, fee or any other
amount by a person by internet banking or by using credit or debit
cards or National Electronic Fund Transfer or Real Time Gross
Settlement or by such other mode and subject to such conditions and
restrictions as may be prescribed, shall be credited to the electronic

© The Institute of Chartered Accountants of India

9.8 INDIRECT TAXES

cash ledger of such person to be maintained in such manner as may
be prescribed.

(2) The input tax credit as self-assessed in the return of a registered
person shall be credited to his electronic credit ledger, in accordance
with section 41, to be maintained in such manner as may be
prescribed.

(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 the provisions of this Act or the rules made
there under in such manner and subject to such conditions and
within such time as may be prescribed.

(4) The amount available in the electronic credit ledger may be used for
making any payment towards output tax under this Act or under the
Integrated Goods and Services Tax Act in such manner and subject
to such conditions and within such time as may be prescribed.

(5) The amount of input tax credit available in the electronic credit
ledger of the registered person on account of––

(a) integrated tax shall first be utilised towards payment of
integrated tax and the amount remaining, if any, may be
utilised towards the payment of central tax and State tax, or as
the case may be, Union territory tax, in that order;

(b) the central tax shall first be utilised towards payment of central
tax and the amount remaining, if any, may be utilised towards
the payment of integrated tax;

(c) the State tax shall first be utilised towards payment of State tax
and the amount remaining, if any, may be utilised towards
payment of integrated tax;

(d) the Union territory tax shall first be utilised towards payment
of Union territory tax and the amount remaining, if any, may
be utilised towards payment of integrated tax;

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PAYMENT OF TAX 9.9

(e) the central tax shall not be utilised towards payment of State
tax or Union territory tax; and

(f) the State tax or Union territory tax shall not be utilised towards
payment of central tax.

(6) The balance in the electronic cash ledger or electronic credit ledger
after payment of tax, interest, penalty, fee or any other amount
payable under this Act or the rules made thereunder may be
refunded in accordance with the provisions of section 54.

(7) All liabilities of a taxable person under this Act shall be recorded and
maintained in an electronic liability register in such manner as may
be prescribed.

(8) Every taxable person shall discharge his tax and other dues under
this Act or the rules made thereunder in the following order, namely:–
–

(a) self-assessed tax, and other dues related to returns of previous
tax periods;

(b) self-assessed tax, and other dues related to the return of the
current tax period;

(c) any other amount payable under this Act or the rules made
thereunder including the demand determined under section 73
or section 74;

(9) Every person who has paid the tax on goods or services or both under
this Act shall, unless the contrary is proved by him, be deemed to
have passed on the full incidence of such tax to the recipient of such
goods or services or both.

Explanation.––For the purposes of this section,—

(a) the date of credit to the account of the Government in the
authorised bank shall be deemed to be the date of deposit in
the electronic cash ledger;

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9.10 INDIRECT TAXES

(b) the expression,—

(i) “tax dues” means the tax payable under this Act and does
not include interest, fee and penalty; and

(ii) “other dues” means interest, penalty, fee or any other
amount payable under this Act or the rules made there
under.

Chapter IX: Payment of Tax of the CGST Rules

Rule 85 Electronic Liability Register

(1) The electronic liability register specified under sub- section (7) of
section 49 shall be maintained in FORM GST PMT-01 for each
person liable to pay tax, interest, penalty, late fee or any other
amount on the common portal and all amounts payable by him
shall be debited to the said register.

(2) The electronic liability register of the person shall be debited by:-

(a) the amount payable towards tax, interest, late fee or any other
amount payable as per the return furnished by the said
person;

(b) the amount of tax, interest, penalty or any other amount
payable as determined by a proper officer in pursuance of any
proceedings under the Act or as ascertained by the said
person;

(c) the amount of tax and interest payable as a result of mismatch
under section 42 or section 43 or section 50; or

(d) any amount of interest that may accrue from time to time.

(3) Subject to the provisions of section 49, payment of every liability by
a registered person as per his return shall be made by debiting the
electronic credit ledger maintained as per rule 86 or the electronic
cash ledger maintained as per rule 87 and the electronic liability
register shall be credited accordingly.

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PAYMENT OF TAX 9.11

(4) The amount deducted under section 51, or the amount collected
under section 52, or the amount payable on reverse charge basis,
(5) or the amount payable under section 10, any amount payable
(6) towards interest, penalty, fee or any other amount under the Act
shall be paid by debiting the electronic cash ledger maintained as
(7) per rule 87 and the electronic liability register shall be credited
Rule 86 accordingly.

(1) Any amount of demand debited in the electronic liability register
(2) shall stand reduced to the extent of relief given by the appellate
(3) authority or Appellate Tribunal or court and the electronic tax
liability register shall be credited accordingly.

The amount of penalty imposed or liable to be imposed shall stand
reduced partly or fully, as the case may be, if the taxable person
makes the payment of tax, interest and penalty specified in the
show cause notice or demand order and the electronic liability
register shall be credited accordingly.

A registered person shall, upon noticing any discrepancy in his
electronic liability ledger, communicate the same to the officer
exercising jurisdiction in the matter, through the common portal in
FORM GST PMT-04.

Electronic Credit Ledger

The electronic credit ledger shall be maintained in FORM GST
PMT-02 for each registered person eligible for input tax credit
under the Act on the common portal and every claim of input tax
credit under the Act shall be credited to the said ledger.

The electronic credit ledger shall be debited to the extent of
discharge of any liability in accordance with the provisions of
section 49.

Where a registered person has claimed refund of any unutilized
amount from the electronic credit ledger in accordance with the
provisions of section 54, the amount to the extent of the claim shall
be debited in the said ledger.

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9.12 INDIRECT TAXES

(4) If the refund so filed is rejected, either fully or partly, the amount
debited under sub- rule (3), to the extent of rejection, shall be re-
credited to the electronic credit ledger by the proper officer by an
order made in FORM GST PMT-03.

(5) Save as provided in the provisions of this Chapter, no entry shall be
made directly in the electronic credit ledger under any
circumstance.

(6) A registered person shall, upon noticing any discrepancy in his
electronic credit ledger, communicate the same to the officer
exercising jurisdiction in the matter, through the common portal in
FORM GST PMT-04.

Explanation For the purposes of this rule, it is hereby clarified that a refund shall
be deemed to be rejected, if the appeal is finally rejected or if the
claimant gives an undertaking to the proper officer that he shall
not file an appeal.

Rule 87 Electronic Cash Ledger

(1) The electronic cash ledger under sub-section (1) of section 49 shall
be maintained in FORM GST PMT-05 for each person, liable to pay
tax, interest, penalty, late fee or any other amount, on the common
portal for crediting the amount deposited and debiting the
payment therefrom towards tax, interest, penalty, fee or any other
amount.

(2) Any person, or a person on his behalf, shall generate a challan in
FORM GST PMT-06 on the common portal and enter the details
of the amount to be deposited by him towards tax, interest, penalty,
fees or any other amount.

Provided that the challan in FORM GST PMT-06 generated at
the common portal shall be valid for a period of fifteen days.

(3) The deposit under sub-rule (2) shall be made through any of the
following modes, namely:-

© The Institute of Chartered Accountants of India

PAYMENT OF TAX 9.13

(i) Internet Banking through authorised banks;

(ii) Credit card or Debit card through the authorised bank;

(iii) National Electronic Fund Transfer or Real Time Gross
Settlement from any bank; or

(iv) Over the Counter payment through authorised banks for
deposits up to ten thousand rupees per challan per tax
period, by cash, cheque or demand draft:

Provided that the restriction for deposit up to ten thousand rupees
per challan in case of an Over the Counter payment shall not apply
to deposit to be made by –

(a) Government Departments or any other deposit to be made
by persons as may be notified by the Commissioner in this
behalf;

(b) Proper officer or any other officer authorised to recover
outstanding dues from any person, whether registered or
not, including recovery made through attachment or sale
of movable or immovable properties;

(c) Proper officer or any other officer authorised for the
amounts collected by way of cash, cheque or demand draft
during any investigation or enforcement activity or any ad
hoc deposit:

Provided further that the challan in FORM GST PMT-06 generated
at the common portal shall be valid for a period of fifteen days.

Explanation For the purposes of this sub-rule, it is hereby clarified that for
making payment of any amount indicated in the challan, the
commission, if any, payable in respect of such payment shall be
borne by the person making such payment.

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9.14 INDIRECT TAXES

(4) Any payment required to be made by a person who is not registered
under the Act, shall be made on the basis of a temporary
identification number generated through the common portal.

(5) Where the payment is made by way of National Electronic Fund
Transfer or Real Time Gross Settlement mode from any bank, the
mandate form shall be generated along with the challan on the
common portal and the same shall be submitted to the bank from
where the payment is to be made:

Provided that the mandate form shall be valid for a period of fifteen
days from the date of generation of challan.

(6) On successful credit of the amount to the concerned government
account maintained in the authorised bank, a Challan
Identification Number shall be generated by the collecting bank
and the same shall be indicated in the challan.

(7) On receipt of the Challan Identification Number from the collecting
bank, the said amount shall be credited to the electronic cash
ledger of the person on whose behalf the deposit has been made
and the common portal shall make available a receipt to this effect.

(8) Where the bank account of the person concerned, or the person
making the deposit on his behalf, is debited but no Challan
Identification Number is generated or generated but not
communicated to the common portal, the said person may
represent electronically in FORM GST PMT-07 through the
common portal to the bank or electronic gateway through which
the deposit was initiated.

(9) Any amount deducted under section 51 or collected under section
52 and claimed in FORM GSTR-02 by the registered taxable person
from whom the said amount was deducted or, as the case may be,
collected shall be credited to his electronic cash ledger in
accordance with the provisions of rule 87.

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PAYMENT OF TAX 9.15

(10) Where a person has claimed refund of any amount from the
electronic cash ledger, the said amount shall be debited to the
electronic cash ledger.

(11) If the refund so claimed is rejected, either fully or partly, the amount
debited under sub-rule (10), to the extent of rejection, shall be
credited to the electronic cash ledger by the proper officer by an
order made in FORM GST PMT-03.

(12) A registered person shall, upon noticing any discrepancy in his
electronic cash ledger, communicate the same to the officer
exercising jurisdiction in the matter, through the common portal in
FORM GST PMT-04.

Explanation 1 The refund shall be deemed to be rejected if the appeal is finally
rejected.

Explanation 2 For the purposes of this rule, it is hereby clarified that a refund shall
be deemed to be rejected, if the appeal is finally rejected or if the
claimant gives an undertaking to the proper officer that he shall
not file an appeal.

Rule 88 Identification number for each transaction

(1) A unique identification number shall be generated at the common
portal for each debit or credit to the electronic cash or credit ledger,
as the case may be.

(2) The unique identification number relating to discharge of any
liability shall be indicated in the corresponding entry in the
electronic liability register.

(3) A unique identification number shall be generated at the common
portal for each credit in the electronic liability register for reasons
other than those covered under sub-rule (2).

© The Institute of Chartered Accountants of India

9.16 INDIRECT TAXES

ANALYSIS

A. ELECTRONIC CASH LEDGER [SECTION 49(1) & (3) READ WITH
RULE 87 OF CGST RULES]

The Electronic Cash Ledger contains a summary of all the deposits/payments made
by a taxpayer. Electronic Cash Ledger is maintained on the GST Portal. The
Electronic Cash Ledger has to be maintained in prescribed form on the common
portal by a person liable to pay tax.

Mode of Deposit in Electronic Cash Ledger

Online Payment Offline Payment

*NEFT stands for National Electronic Fund Transfer.
**RTGS stands for Real Time Gross Settlement.

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PAYMENT OF TAX 9.17

Non-applicability of Over the Counter payment limit on deposits to be made by

Proper officer or any other officer authorized Government Departments

to recover outstanding to collect the amount by Persons notified by
dues including way of Commissioner

attachment proceedings cash/cheque/demand
or sale of moveable/ draft during any

immoveable properties investigation/enforcement
activity /any ad hoc
deposit

Payment by Challan
What are CPIN, CIN, BRN and E-FPB?

CPIN stands for Common portal Identification Number. It is created for every
Challan successfully generated by the taxpayer. It is a 14-digit unique number
to identify the challan. CPIN remains valid for a period of 15 days.

CIN or Challan Identification Number is generated by the banks, once
payment in lieu of a generated Challan is successful. It is a 17-digit number
that is 14-digit CPIN plus 3-digit Bank Code.

CIN is generated by the authorized banks/Reserve Bank of India (RBI) when
payment is actually received by such authorized banks or RBI and credited in
the relevant government account held with them. It is an indication that the
payment has been realized and credited to the appropriate government
account. CIN is communicated by the authorized bank to taxpayer as well as
to GSTN.

BRN or Bank Reference Number is the transaction number given by the bank
for a payment against a Challan

E-FPB stands for Electronic Focal Point Branch. These are branches of
authorized banks which are authorized to collect payment of GST. Each
authorized bank will nominate only one branch as its E-FPB for pan India
transaction.

The E-FPB will have to open accounts under each major head for all
governments. Any amount received by such E-FPB towards GST will be
credited to the appropriate account held by such E-FPB. For NEFT/RTGS
Transactions, RBI will act as E-FPB.

© The Institute of Chartered Accountants of India

9.18 INDIRECT TAXES

Are manual Challans applicable as allowed earlier under the VAT regimes?

Manual or physical Challans are not allowed under the GST regime. It is
mandatory to generate Challans online on the GST Portal.

How many types of Challans are prescribed for various taxes and payments
to be paid under the GST regime?

There is single Challan prescribed for all taxes, fees, penalty, interest, and
other payments to be made under the GST regime.

Other Aspects relating to Challan

E- challan validity is for 15 days. The commission for making payment through e-
challan has to be borne by the person making the payment.

Any unregistered person has to make payment on the Validity of
basis of temporary identification number generated challan-15 days
through common portal.

The mandate form obtained after making NEFT/RTGS
payment has to be submitted in the Bank. The validity of the mandate form is 15
days.

On successful credit of amount in the concerned (Central/State) Government
Account maintained in the authorized bank, a Challan Identification Number (CIN)
will be generated by the collecting bank which will be indicated in the challan.

The ‘deposit’ made by one of the modes and in the prescribed manner will be
credited to the Electronic Cash Ledger of the taxable person.

On receipt of the CIN from the collecting bank, the said amount is credited into
the electronic cash ledger of the person on whose behalf the deposit is made and
the common portal will generate a receipt to this effect.

If CIN is not generated even after making payment and submission of mandate
form or when after generation, it has not reflected in the common portal, the
person making the deposit or the person on whose behalf the deposit has been
made, can make a representation in prescribed form through the common portal
or e-gateway through which the payment has been made.

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PAYMENT OF TAX 9.19

Date of credit into the treasury of the State Government/Central Government is
deemed to be the date of deposit and not the actual date of debit to the amount
of the taxable person.

In case any discrepancy is noticed in electronic cash ledger, the registered person
shall communicate the same to the officer exercising jurisdiction in the matter,
through the common portal in prescribed form.

Manner of utilization of amount reflected in Electronic Cash Ledger
Sub-section 3 of section 49 of the CGST Act lays down the following:

The amount reflected in the electronic cash ledger may be used for making any
payment towards tax, interest, penalty, fee, or any other amount under the relevant
tax head in the prescribed manner.

In the ledger, information is kept minor head-wise for each major head. The ledger
is displayed major head-wise i.e., IGST, CGST, SGST/UTGST, and CESS. Each major
head is divided into five minor heads: Tax, Interest, Penalty, Fee, and Others.

A registered taxpayer can make cash deposits in the recognized Banks through the
prescribed modes to the Electronic Cash Ledger using any of the Online or Offline
modes permitted by the GST Portal. The Cash deposits can be used for making
payment(s) like tax liability, interest, penalties, fee, and others.

Major Heads Minor Heads
IGST Tax
CGST
Interest
SGST/UTGST Penalty

CESS Fee
Others

© The Institute of Chartered Accountants of India

9.20 INDIRECT TAXES

How can the cash available in the Electronic Cash Ledger be utilised? Can a
taxpayer utilise the amount available in any minor head of a major head for
any other minor head of the same major head?

The amount available in the Electronic Cash Ledger can be utilised for
payment of any liability for the respective major and minor heads. For
example, liability for the tax under SGST/UTGST can be settled only from the
available amount of cash under SGST/UTGST Major head.

An amount of ` 1,000 is available under minor head ‘tax’ of
major head ‘SGST/UTGST’ and the taxpayer has a liability of
` 200 for minor head ‘interest’ under the same major head

‘SGST/UTGST’. Since, there is no amount available under minor

head ‘interest’ under major head “SGST/UTGST”, therefore, interest
payment cannot be made from the amount available under ‘tax’ of the

same major head

Is transfer of funds between the major heads permissible for discharging
liabilities?

Amount available under one major head (SGST/UTGST, CGST, IGST or CESS)
cannot be utilised for discharging the liability under any other major head.
For example, amount available in SGST/UTGST cannot be utilised for
discharging liabilities under CGST, IGST, or CESS and vice versa

A taxpayer made a cash deposit of ` 1,000 to IGST – Tax, through
net banking. The tax payer can utilise this cash deposit of ` 1,000
in the cash ledger to make payment ONLY of the IGST – Tax liability,
by debiting the Cash Ledger.

B. ELECTRONIC CREDIT LEDGER [SECTION 49(2),(4) & (5) READ WITH
RULE 86 OF CGST RULES]

Sub-section (2) of section 49 of the CGST Input Tax Credit as self-assessed in
Act provides that the self-assessed input monthly returns will be reflected in
tax credit (ITC) by a registered person the ITC Ledger. The credit in this
shall be credited to its Electronic Credit ledger can be used to make
Ledger or Electronic Input Tax Credit payment of TAX ONLY and not
Ledger. This is to be maintained in the other amounts such as interest,
prescribed form. penalty, fees etc.

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PAYMENT OF TAX 9.21

Manner of utilisation of ITC

The electronic credit ledger can be debited only to the extent of the discharge
of any liability in accordance with section 49.

The input tax credit available under the head IGST in the electronic credit
ledger will first be utilized against IGST payment.
✓ Remaining amount if any, will be utilized in the following manner:-

(a) as against CGST payment

(b) if any amount is remaining after adjustment against CGST
payment, it can be utilized to make SGST/UTGST payment.

Available CGST Credit in the credit ledger shall first be utilized for payment
of CGST.
✓ Remaining amount if any, will be utilized for payment of IGST

Available SGST /UTGST credit in the credit ledger shall first be utilized for
payment of SGST/UTGST.
✓ Remaining amount if any, will be utilized for payment of IGST

CGST credit cannot be utilized for payment of SGST/UTGST.

Similarly, SGST/UTGST credit cannot be utilized for payment of CGST.

Transfer of input tax credit

Section 53 of CGST Act provides simple but important modus operandi in
respect of post CGST utilisation towards IGST liability. Under section
49(5)(b),(c) and (d) of the Act, CGST/SGST/UTGST credits can be utilised by a
tax payer on priority basis to respective CGST/SGST/UTGST dues first. Then, in
case of CGST, balance, if any, can be used to pay towards IGST. If used so, there
shall be reduction in central tax caused by Central Government and equal credit
shall be ensured to IGST in the prescribed manner.

In other words, if CGST is utilised to pay towards dues of IGST, there shall be
reduction in CGST on such utilisation and the Central Government shall transfer
equivalent amount to the credit of IGST account. Thus, in this manner the
Central Government shall ensure due credit to IGST.

© The Institute of Chartered Accountants of India

9.22 INDIRECT TAXES

Such treatment shall be ensured by the Central Government for UTGST and
SGST also in respective cases.

It may be noted that equivalent provision is there in Section 18 of IGST Act,
2017.

The protocol to avail and utilize the credit of CGST, SGST/UTGST and IGST can be
better understood with the help of following diagram:

ITC of ITC of CGST ITC of SGST/UTGST
IGST CGST
SGST/
IGST UTGST

CGST IGST IGST

SGST/UTGST

ITC of ITC of CGST
CGST SGST/

SGST/UTGST UTGST

What happens if the taxable person files the return but does not make
payment of tax?

In such cases, the return is not considered as a valid return. Section 2(117)
defines a valid return to mean a return furnished under sub-section (1) of
section 39 on which self-assessed tax has been paid in full. It is only the valid
return that would be used for allowing input tax credit (ITC) to the recipient. In
other words, unless the supplier has paid the entire self-assessed tax and filed
his return and the recipient has filed his return, the ITC of the recipient would
not be confirmed.

© The Institute of Chartered Accountants of India

PAYMENT OF TAX 9.23

Common Points for Electronic Cash & Credit Ledger

Where a person has claimed refund of any amount from the electronic
cash or credit ledger, the said amount shall be debited to the electronic
cash or credit ledger.

If the refund so claimed is rejected, either fully or partly, the amount
debited earlier, to the extent of rejection, shall be credited to the electronic
cash or credit ledger by the proper officer by an order made in prescribed
form

C. ELECTRONIC LIABILITY REGISTER [SECTION 49(7), (8) & (9) READ
WITH RULE 85 OF CGST RULES]

Sub-section (7) of section 49 speaks about the Electronic Liability
third kind of ledger to be maintained by a
taxable person viz. Electronic Liability Register will reflect the
Register. While the terms “Electronic Cash
Ledger” and “Electronic Credit Ledger” are total tax liability of a

defined in the Act, the term “Electronic Liability taxpayer (after netting)

Register” is not defined. The Section lays down for the particular

that all liabilities of a taxable person will be month.
maintained in a separate register.

Order of discharge of tax and other dues

Sub-section (8) prescribes the chronological order in which the liability of a
taxable person has to be discharged:

self -assessed tax and other dues for the previous tax periods have to be
discharged first.

the self -assessed tax and other dues for the current period have to be
discharged next.

Once these two steps are exhausted, thereafter any other amount payable
including demand determined under section 73 or section 74 to be
discharged. In other words, the liability if any, arising out of demand
notice and adjudication proceedings comes last. This sequence has to be
mandatorily followed.

The expression “other dues” referred above mean interest, penalty, fee or any
other amount payable under the Act or the rules made thereunder.

© The Institute of Chartered Accountants of India

9.24 INDIRECT TAXES

Presumption that incidence of tax is passed on

Sub-section (9) contains a deeming clause. This part of the section provides
that when a taxable person has paid the GST under the corresponding Act, the
taxable person is deemed to have passed on the incidence of such payment of
tax to the recipient of such goods and /or services. Thus, if tax has been paid
under the CGST Act, then the taxable person is deemed to have passed on the
incidence of such payment of CGST to the recipient. This is subject to the
contrary being proved.

Chapter IX of CGST Rules provide the following:

(I) Debit to electronic liability register:

all amounts payable towards tax, interest, late fee and any other amount
as per return filed;

all amounts payable towards tax, interest, penalty and any other amount
determined in a proceeding by an Assessing authority or as ascertained
by the taxable person;

the amount of tax and interest as a result of mismatch.

any interest amount that may accrue from time to time.

(II) Debit to Electronic Credit/Cash ledger:

Debit to Electronic Credit Debit to Electronic Cash Ledger

Ledger and Credit to Electronic and Credit to Electronic Liability

Liability Register Register

Payment of all the liabilities of a Payment of all the liabilities of a

registered person as per his return registered person as per his return

subject to section 49. subject to section 49.

Payment of TDS deducted under
section 51, TCS2 deducted by e-

commerce operator under section

52, amount payable under reverse

charge basis, amount payable under

2 It may be noted that sections 51 & 52 dealing with provisions relating to TDS & TCS respectively
will be dealt in detail at Final Level.

© The Institute of Chartered Accountants of India

PAYMENT OF TAX 9.25

section 10, amount payable towards
payment of interest, penalty, fee or
any other amount under the Act.

How do the new payment systems benefit the taxpayer and the Commercial
Tax Department?

No more queues and waiting for making payments as payments can be made
online 24 X 7.

Instant online receipts for payments made online.

Tax Consultants can make payments on behalf of the clients.

Single Challan form to be created online, replacing the three or four copy
Challan.

Revenue will come earlier into the Government Treasury as compared to the
old system.

Greater transparency.

Online payments made after 8 pm will be credited to the taxpayer’s account
on the same day.

4. INTEREST ON DELAYED PAYMENT OF TAX [SECTION 50]

STATUTORY PROVISIONS

Section 50 Interest on delayed payment of tax

Sub-section Particulars

(1) Every person who is liable to pay tax in accordance with the
provisions of this Act or the rules made thereunder, but fails to pay
the tax or any part thereof to the Government within the period
prescribed, shall for the period for which the tax or any part thereof
remains unpaid, pay, on his own, interest at such rate, not
exceeding eighteen per cent., as may be notified by the
Government on the recommendations of the Council.

© The Institute of Chartered Accountants of India

9.26 INDIRECT TAXES

(2) The interest under sub-section (1) shall be calculated, in such
manner as may be prescribed, from the day succeeding the day on
which such tax was due to be paid.

(3) A taxable person who makes an undue or excess claim of input tax
credit under sub-section (10) of section 42 or undue or excess
reduction in output tax liability under sub-section (10) of section
43, shall pay interest on such undue or excess claim or on such
undue or excess reduction, as the case may be, at such rate not
exceeding twenty-four per cent., as may be notified by the
Government on the recommendations of the Council.

ANALYSIS

When interest is payable ?
Interest is payable in following 3 circumstances:-

Delay in payment of tax, in full or in part within the prescribed period
Undue or excess claim of input tax credit under section 42(10)
Undue or excess reduction in output tax liability under section 43(10)

 section 42 (10) of CGST Act deals with contravention of provisions for
 matching of claims for input tax credit by a recipient and

section 43 (10) of CGST Act deals with contravention of provisions for
matching of claims for reduction in output tax liability by a supplier

Rate of interest

The rate of interest shall be notified by the Government on the basis of
recommendation of the Council. However, such rate to be notified shall not
exceed-

(a) 18% in case of belated payment of tax i.e. on failure to pay tax (or part of
tax) to the Government’s account. Notification No. 13/2017 CT dated
28.06.2017 has notified the rate of interest as 18% per annum.

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PAYMENT OF TAX 9.27

(b) 24% on undue or excess claim of ITC or on such undue or excess reduction
in output tax liability. Notification No. 13/2017 CT dated 28.06.2017 has
notified the rate of interest as 24% per annum.

Computation of period for calculation of interest

The period of interest will be from the date following the due date of payment
to the actual date of payment of tax.

Other relevant points relating to interest

The term “tax” here means the tax payable under the Act or Rules made
thereunder.

The payment of interest in case of belated payment of tax should be made
voluntarily i.e. even without a demand.

The interest payable under this section shall be debited to the Electronic
Liability Register.

The liability for interest can be settled by adjustment with balance in
Electronic Cash Ledger but not with balance in electronic credit ledger.

5. TAX WRONGFULLY COLLECTED AND PAID TO CENTRAL
GOVERNMENT OR STATE GOVERNMENT [SECTION 19
OF IGST ACT]

Payment of tax based on erroneous determination of ‘nature of supply’ is not
permitted to be adjusted because of the above appropriation of payments. Remedy
lies in refund.

Taxable person who has paid tax in error is entitled to refund by first restoring the
discharge of the correct tax due so that the incorrect tax paid reflects on the
common portal as ‘paid in excess’ and

• IGST paid in error will be refunded subject to conditions prescribed

• IGST payable due to payment of CGST & SGST/UTGST is exempted from
payment of interest on IGST due.

© The Institute of Chartered Accountants of India

9.28 INDIRECT TAXES

6. LET US RECAPITULATE

The provisions relating to payment of tax, interest and other amounts have been
summarised by way of table and diagrams to help students remember and retain
the provisions in a better and effective manner:-

DEFINITIONS OF CERTAIN KEY TERMS

Output
Tax

means excludes tax
payable
CGST on taxable
supply of goods and on
reverse
/or services charge

basis

by by agent
taxable of taxable
person
person

Taxable
Person

means

a person

who is registered liable to be
registered

under section under section
22 of CGST Act 24 of CGST Act

© The Institute of Chartered Accountants of India

PAYMENT OF TAX 9.29
Payments to be made in GST regime

For Intra-state supply CGST & SGST
are to be paid.

For Inter-state supply IGST to be paid,

having components of
both CGST & SGST

Wherever applicable Interest, penalty,
fees and any other
amount also to be

paid

Key Features of Payment process

Electronically generated challan from GSTN common portal in all modes of
payment and no use of manually prepared challan;
Facilitation for the tax payer by providing hassle free, anytime, anywhere mode of
payment of tax;
Convenience of making payment online;
Logical tax collection data in electronic format;
Faster remittance of tax revenue to the Government Account;
Paperless transactions;
Speedy Accounting and reporting;
Electronic reconciliation of all receipts;
Simplified procedure for banks;
Warehousing of Digital Challan.

© The Institute of Chartered Accountants of India

9.30 INDIRECT TAXES

What are E-Ledgers?

Electronic Ledgers or E-Ledgers are statements of cash and input tax
credit in respect of each registered taxpayer. In addition, each
taxpayer shall also have an electronic tax liability register.

Types of Electronic ledgers

Electronic Cash
Ledger

Electronic Electronic Credit
Ledgers Ledger

Electronic
Liability Register

A. Electronic Cash Ledger

© The Institute of Chartered Accountants of India

PAYMENT OF TAX 9.31
Modes of Deposit in Electronic Cash Ledger

Major and Minor Heads of Payment

Major Heads Each of these Major
• IGST Heads have the five
•CGST following Minor Heads
• SGST/UTGST
•CESS Minor Heads
• Tax

• Interest
• Penalty
• Fee
• Others

Cross utilization of funds across major or minor heads NOT possible
Date of deposit of tax dues

Which date is considered as date of deposit of the tax dues ? ×
(i) Date of presentation of cheque ×
√
(ii) Date of payment

(iii) Date of credit of amount in the account of
government

© The Institute of Chartered Accountants of India

9.32 INDIRECT TAXES

B. Electronic credit ledger

Order of utilisation of input tax credit available in electronic
credit ledger [Section 49(5) of CGST Act]

Input tax credit of IGST

IGST SGST/ UTGST

CGST NO SGST/ No UTGST
Input tax credit of CGST

CGST

IGST NO CGST
Input tax credit of SGST

SGST

IGST NO CGST
Input tax credit of UTGST

UTGST

IGST

The CGST credit cannot be utilized for payment of SGST/UTGST.
The SGST/UTGST credit cannot be utilized for payment of CGST.

© The Institute of Chartered Accountants of India

PAYMENT OF TAX 9.33

C. Electronic liability register

Order of discharge of liability of taxable person

1. All dues 2. All dues 3. All dues
related to related to including
previous tax current tax demand
period period determined
under section
73 and 74

Manner of making payment

Through debit of Electronic Credit In cash, by debit in the Electronic
Ledger Cash Ledger

Through debit of Credit Ledger of the Payment can be made in cash, by debit
tax payer maintained on the Common in the Cash Ledger of the tax payer
portal – ONLY Tax can be paid. maintained on the common portal.

E-Ledgers •It will reflect all deposits made in cash, and TDS/TCS
made on account of the tax payer.
Electronic Cash
Ledger •This ledger can be used for making ANY PAYMENT
towards tax, interest, penalty, fees or any other
Electronic Credit amount on account of GST.
Ledger
•It will reflect Input Tax Credit as self-assessed in
Electronic Liability monthly returns.
Register
•The credit in this ledger can be used to make
payment of TAX ONLY i.e. output tax and not other
amounts such as interest, penalty, fees etc.

•Electronic Liability Register will reflect the total tax
liability of a taxpayer (after netting) for the particular
month.

© The Institute of Chartered Accountants of India

9.34 INDIRECT TAXES

Payment of Tax via Electronic Ledger
A. Electronic Cash Ledger

(Assume it as an account statement provided by bank, for easy understanding)

Debit Amount (DR) Credit Amount (CR)

• Credit amount of this ledger may be used • Any deposit made towards tax,

for payment of tax, interest, fees etc. interest, penalty, late fee etc.

• Remaining credit balance amount after via internet banking, RTGS,
payment of above tax etc. will be fund transfer etc.

refunded to taxable person. • TDS/TCS claimed

B. Electronic Credit ledger Credit Amount (CR)

Debit Amount (DR) Input Tax credit as self-assessed
in the return in the form of IGST,
• Credit amount of this ledger may be • CGST, SGST, UTGST
used for payment of output tax viz
IGST, CGST, SGST, UTGST in the
prescribed order.

C. Electronic Liability Register Credit Amount (CR)
• Electronic cash ledger
Debit Amount (DR)
• Electronic credit ledger
• Amount payable towards tax, interest,
fees etc.

• Tax or interest payable due to
mismatch

• Any other dues
• Amount payable towards output tax

© The Institute of Chartered Accountants of India

PAYMENT OF TAX 9.35

Interest on delayed payment of tax [Section 50]

Interest Rates

If person pays the unpaid Undue or excess claim of
amount on his own Input tax credit or undue

or excess reduction in
output tax liability

18% per annum 24% per annum

7. TEST YOUR KNOWLEDGE

1. Which of these electronic ledgers are maintained online?
(a) Electronic liability register
(b) Electronic credit ledger
(c) Electronic cash ledger
(d) All of the above

2. Deposits towards tax, penalty, interest, fee or any other amount are credited into the
---------------------- of a taxable person.
(a) Electronic liability register
(b) Electronic credit ledger
(c) Electronic cash ledger
(d) All of the above

3. Input tax credit as self-assessed in the return of the registered person shall be
credited to which of the following ledger?
(a) Electronic liability register

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9.36 INDIRECT TAXES

(b) Electronic credit ledger
(c) Electronic cash ledger
(d) All of the above
4. Which of the following items are debited to electronic credit ledger?
(a) Output tax
(b) Interest
(c) Penalty
(d) All of the above
5. Balance in electronic credit ledger under SGST can be used against which liability?
(a) SGST Liability only
(b) SGST and IGST liability
(c) SGST, IGST and CGST liability
(d) None of the above
6. Which input tax credit cannot be claimed against which output tax liability?
(a) IGST, SGST
(b) CGST, IGST
(c) SGST, IGST
(d) CGST, SGST
7. Interest is payable on:-
(a) Belated payment of tax
(b) Undue/excess claim of input tax credit
(c) Undue/ excess reduction in output tax liability
(d) All of the above
8. Which of the following liability cannot be adjusted against input tax credit of CGST?
(a) IGST
(b) SGST/UTGST
(c) All of the above

© The Institute of Chartered Accountants of India

PAYMENT OF TAX 9.37

(d) None of the above
9. Which of the following shall be discharged first, while discharging liability of a

taxable person?
(a) All dues related to previous tax period
(b) All dues related to current tax period
(c) Demand raised under section 73 and 74
(d) No such condition is mandatory
10. Interest is calculated:-
(a) From the day following the day on which tax becomes due to be paid
(b) From the last day such tax was due to be paid
(c) No period is specified
(d) None of the above
11. Which of the following statement is true:
Which date is considered as date of deposit of the tax dues
(a) Date of presentation of cheque or
(b) Date of payment or
(c) Date of credit of amount in the account of Government
12. How many types of electronic ledger are there?
13. What are the main features of GST payment process?
14. Explain the following terms in brief:
(a) E-FPB
(b) CPIN
(c) CIN
15. Are principles of unjust enrichment applicable for payment made under GST?
16. State the name of output tax under GST, where any of the input tax credit under
GST can be availed?

© The Institute of Chartered Accountants of India

9.38 INDIRECT TAXES

8. ANSWERS/HINTS (b) 6. (d) 7. (d) 8. (b) 9. (a)

1. (d) 2. (c) 3. (b) 4. (a) 5.
10. (a) 11. (c)

12. (a) Electronic cash ledger

(b) Electronic credit ledger

(c) Electronic liability register

13. Refer para-Electronic Liability Register

14. Refer para-Electronic Cash Ledger

15. Yes, as per Section 49 (9) of the CGST Act, 2017 every person who has paid the tax
on goods or services or both under this Act shall, unless the contrary is proved by
him, be deemed to have passed on the full incidence of such tax to the recipient
of such goods or services or both.

16. IGST. IGST, CGST, SGST, UTGST i.e. all input tax credit can be availed against output
tax liability known as IGST.

© The Institute of Chartered Accountants of India

10CHAPTER

RETURNS

For the sake of brevity, the term input tax credit has been referred to as ITC in this Chapter. The
section numbers referred to in the Chapter pertain to CGST Act, unless otherwise specified.

LEARNING OUTCOMES

This Chapter will equip you to –

 enlist the various types of statements and returns to be filed by a
registered taxpayer

 identify the persons eligible to file various statements/returns as
also the forms prescribed therefor and explain the periodicity for
filing such statements/returns

 understand the consequences in case of default in filing of return
 apply the above concepts in problem solving
 explain the provisions relating to GST practitioner

© The Institute of Chartered Accountants of India

10.2 INDIRECT TAXES

Furnishing of details of outward supplies

GSTR-3B

Furnishing of returns under section 39 GSTR-4
GSTR-5

RETURNS First Return

Other returns Annual Return
Final Return

Default in furnishing return GSTR-11

Notice to return
defaulters

Levy of late fee

Goods and services tax practitioners

1. INTRODUCTION

The term “return” ordinarily means statement of information (facts) furnished by the
taxpayer, to tax administrators, at regular intervals. The information to be furnished in
the return generally comprises of the details pertaining to the nature of
activities/business operations forming the subject matter of taxation; the measure of
taxation such as sale price, turnover, or value; deductions and exemptions; and
determination and discharge of tax liability for a given period.

© The Institute of Chartered Accountants of India

RETURNS 10.3

In any tax law, “filing of returns” constitutes the most important compliance procedure
which enables the Government/ tax administrator to estimate the tax collection for a
particular period and determine the correctness and completeness of the tax
compliance of the taxpayers.

The returns serve the following purposes:

a) Mode for transfer of information to tax
administration;

b) Compliance verification program of tax
administration;

c) Finalization of the tax liabilities of the taxpayer
within stipulated period of limitation;

d) Providing necessary inputs for taking policy decision;

e) Management of audit and anti-
evasion programs of tax
administration

The taxpayer is generally required to furnish Filing of GST returns helps in
the return in a specific statutory format. determination of tax liability
These formats are, therefore, designed to of the return filer and at the
take care of all the provisions of the law that same time it also has a huge
have a bearing on computation of tax bearing on determination of
liability of a taxpayer. Hence, a study of tax liability of other persons
various fields contained in the form of return with whom the former has
vis-à-vis the relevant corresponding entered into taxable
provisions of the tax law, can facilitate overall activities.
understanding of the tax law in a better
manner.

Under the GST laws, the correct and timely filing of returns is
of utmost importance because of two reasons. Firstly, under
GST laws, a taxpayer is required to estimate his tax liability on
“self-assessment” basis and deposit the tax amount along
with/before the filing of such return. The return, therefore,
constitutes a kind of working sheet/supporting document for
the tax authorities that can be relied upon as the basis on which
the tax has been computed by the taxpayer. Secondly, under the GST regime, filing of
returns not only determines the tax liability of the person filing the same, but it also

© The Institute of Chartered Accountants of India

10.4 INDIRECT TAXES

has a huge bearing on determination of tax liability of other persons with whom the
former has entered into taxable activities.
Chapter IX of the CGST Act [Sections 37 to 48] prescribes the provisions relating to
filing of returns as under:

Section 37 Furnishing details of outward supplies

Section 38 Furnishing details of inward supplies

Section 39 Furnishing of returns

Section 40 First return

Section 41 Claim of input tax credit and provisional acceptance thereof

Section 42 Matching, reversal and re-claim of input tax credit

Section 43 Matching, reversal and re-claim of reduction in output tax liability

Section 44 Annual Return

Section 45 Final Return

Section 46 Notice to return defaulters

Section 47 Levy of late fee

Section 48 Goods and services tax practitioners
The provisions relating to form and manner, in which information is to be furnished
through returns, are given under Chapter VIII of the CGST Rules [Rules 59-84]. State
GST laws also prescribe identical provisions in relation to filing of returns.

Provisions of returns, other than late fee, under CGST Act have also been
made applicable to IGST Act vide section 20 of the IGST Act.

© The Institute of Chartered Accountants of India

RETURNS 10.5

However, the return filing process is under review and is yet not finalized. A
simplified monthly return in Form GSTR 3B was introduced in July, 2017 to
help businesses to file returns easily in the initial months of GST roll out. This
was to be followed with filing of returns - GSTR - 1, 2 and 3. Further, to ease
the compliance requirements for small tax payers, the GST Council allowed
taxpayers with annual aggregate turnover up to ` 1.5 Crore to file details of
outward supplies in Form GSTR-1 on a quarterly basis and on monthly basis
by taxpayers with annual aggregate turnover greater than ` 1.5 Crore. The
GST Council also recommended to postpone the date of filing of Forms GSTR-
2 (details of inward supplies) and GSTR-3 (monthly return) for all normal tax
payers, irrespective of turnover, till further announcements were made in this
regard.

The return process has still not been streamlined and the GST Council has
extended GSTR-3B filing requirement till end of March, 2019. Therefore, in
the subsequent pages of this Chapter, provisions of only those sections which
are practically effective, have been discussed.

The CBIC has issued a press releases relating to the decision taken by the GST Council
in its 28th meetings held on 21st July, 2018, with regard to return simplification
process. The salient features of the press release are:

1. All taxpayers excluding small taxpayers and a few exceptions like ISD etc. shall
file one monthly return. The return is simple with two main tables. One for
reporting outward supplies and one for availing input tax credit based on
invoices uploaded by the supplier. Invoices can be uploaded continuously by
the seller and can be continuously viewed and locked by the buyer for availing
input tax credit. This process would ensure that very large part of the return is
automatically filled based on the invoices uploaded by the buyer and the seller.
Simply put, the process would be “UPLOAD – LOCK – PAY” for most tax payers.

2. Taxpayers would have facility to create his profile based on nature of supplies
made and received. The fields of information which a taxpayer would be shown
and would be required to fill in the return would depend on his profile.

3. NIL return filers (no purchase and no sale) shall be given facility to file return
by sending SMS.

4. Council approved quarterly filing of return for the small taxpayers having
turnover below ` 5 Cr as an optional facility. Quarterly return shall be similar
to main return with monthly payment facility but for two kinds of registered

© The Institute of Chartered Accountants of India

10.6 INDIRECT TAXES

persons – small traders making only B2C supply or making B2B + B2C supply.
For such taxpayers, simplified returns have been designed called Sahaj and
Sugam. In these returns details of information required to be filled is lesser
than that in the regular return.

5. The new return design provides facility for amendment of invoice and also other
details filed in the return. Amendment shall be carried out by filing of a return
called amendment return. Payment would be allowed to be made through the
amendment return as it will help save interest liability for the taxpayers.1

However, as on date2, the new simplified return process as envisaged in the
above press release has not become effective. Therefore, in this chapter only
those provisions which are currently effective, have been discussed. The
amendments which will be made in the law to give effect to the new process,
once it becomes operational, will be given in the Statutory Update.

All the returns under GST laws are to be filed electronically. Taxpayers can file
the statements and returns by various modes. Firstly, they can file their statement
and returns directly on the GST common portal online. However, this may be
tedious and time consuming for taxpayers with large number of invoices. For such
taxpayers, offline utilities have been provided by GSTN that can be used for
preparing the statements offline after downloading the auto populated details and
uploading them on the common portal. GSTN has also developed an ecosystem of
GST Suvidha Providers (GSP) that will integrate with the common portal.

The details furnished by the taxpayer in the form of returns shall be consolidated
and stored at the common portal which will be common for both, i.e. Central
Government and State Governments.

1 The Press Release is given solely with the objective of familiarising the students with the proposed
process.
2 Date when the Study Material was released for printing

© The Institute of Chartered Accountants of India

RETURNS 10.7

2. RELEVANT DEFINITIONS

Common portal means the common goods and services tax electronic portal
referred to in section 146 [Section 2(26)].

Credit note means a document issued by a registered person under sub-
section (1) of section 34 [Section 2(37)].

Debit note means a document issued by a registered person under sub-
section (3) of section 34 [Section 2(38)].

Electronic cash ledger means the electronic cash ledger referred to in sub-
section (1) of section 49 [Section 2(43)].

Electronic credit ledger means the electronic credit ledger referred to in
sub-section (2) of section 49 [Section 2(46)].

Exempt supply means supply of any goods or services or both which attracts
nil rate of tax or which may be wholly exempt from tax under section 11, or
under section 6 of the Integrated Goods and Services Tax Act, and includes
non-taxable supply [Section 2(47)].

Goods and services tax practitioner means any person who has been
approved under section 48 to act as such practitioner [Section 2(55)].

Invoice or tax invoice means the tax invoice referred to in section 31
[Section 66].

Inward supply in relation to a person, shall mean receipt of goods or services
or both whether by purchase, acquisition or any other means with or without
consideration [Section 2(67)].

Non-resident taxable person means any person who occasionally
undertakes transactions involving supply of goods or services or both,
whether as principal or agent or in any other capacity, but who has no fixed
place of business or residence in India [Section 2(77)].

© The Institute of Chartered Accountants of India

10.8 INDIRECT TAXES

Outward supply in relation to a taxable person, means supply of goods or
services or both, whether by sale, transfer, barter, exchange, licence, rental,
lease or disposal or any other mode, made or agreed to be made by such
person in the course or furtherance of business [Section 2(83)].

Prescribed means prescribed by rules made under this Act on the
recommendations of the Council [section 2(87)].

Proper officer in relation to any function to be performed under this Act,
means the Commissioner or the officer of the central tax who is assigned that
function by the Commissioner in the Board [Section 2(91)].

Quarter shall mean a period comprising three consecutive calendar months,
ending on the last day of March, June, September and December of a
calendar year [Section 2(92)].

Recipient of supply of goods or services or both, means—

• where a consideration is payable for the supply of goods or services or

both, the person who is liable to pay that consideration;

• where no consideration is payable for the supply of goods, the person

to whom the goods are delivered or made available, or to whom
possession or use of the goods is given or made available; and

• where no consideration is payable for the supply of a service, the person

to whom the service is rendered,

and any reference to a person to whom a supply is made shall be construed
as a reference to the recipient of the supply and shall include an agent acting
as such on behalf of the recipient in relation to the goods or services or both
supplied [Section 2(93)].

Registered person means a person who is registered under section 25 but
does not include a person having a Unique Identity Number [Section 2(94)].

Return means any return prescribed or otherwise required to be furnished by
or under this Act or the rules made thereunder [Section 2(97)].

Reverse charge means the liability to pay tax by the recipient of supply of
goods or services or both instead of the supplier of such goods or services or
both under sub-section (3) or sub-section (4) of section 9, or under sub-

© The Institute of Chartered Accountants of India

RETURNS 10.9

section (3) or sub- section (4) of section 5 of the Integrated Goods and
Services Tax Act [Section 2(98)].

Supplier in relation to any goods or services or both, shall mean the person
supplying the said goods or services or both and shall include an agent acting
as such on behalf of such supplier in relation to the goods or services or both
supplied [Section 2(105)].

Tax period means the period for which the return is required to be furnished
[Section 106].

Taxable person means a person who is registered or liable to be registered
under section 22 or section 24 [Section 2(107)].

Taxable supply means a supply of goods or services or both which is leviable
to tax under this Act [Section 2(108)].

Valid return means a return furnished under sub-section (1) of section 39 on
which self-assessed tax has been paid in full [Section 2(117)].

3. FURNISHING DETAILS OF OUTWARD SUPPLIES
[SECTION 37 READ WITH RULE 59 OF CGST RULES]

(i) Who is required to furnish details of outward supplies?

The details of outward supplies (see definition) of
both goods and services are required to be
furnished by every registered person including
casual registered person except the following:
 input service distributor (ISD)*
 non-resident taxable person
 person paying tax under composition scheme
 person deducting tax at source*
 person collecting tax at source i.e., e-commerce operator (ECO), not

being an agent*
 a supplier of online information and database access or retrieval

services (OIDAR)*

* Note: Provisions for filing of returns by an input service distributor, a person
deducting tax at source, a person collecting tax at source and a supplier of online

© The Institute of Chartered Accountants of India

10.10 INDIRECT TAXES

information and database access or retrieval services (OIDAR) will be discussed
at the Final level.

Persons All ♦ ISD
required to registered
file GSTR-1 persons ♦ Non-resident taxable
including person

casual ♦ Composition taxpayer
registered
♦ Tax deductor
person
♦ ECO

♦ Supplier of OIDAR
service

(ii) What is the form for submission of details of outward supplies?

The details of outward supplies are required to be furnished, electronically, in
Form GSTR-1. Such details can be furnished through the common portal,
either directly or from a notified Facilitation Centre.

(iii) What is the due date of submission of GSTR-1?

GSTR-1 for a particular month is filed on or before the 10th day of the
immediately succeeding month. In other words, GSTR-1 of a month can be
filed any time between 1st and 10th day of the succeeding month. It may be
noted that GSTR-1 cannot be filed during the period from 11th day to 15th day
of month succeeding the tax period.

As a measure of easing the compliance requirement for small tax payers,
GSTR-1 has been allowed to be filed quarterly by small tax payers with
aggregate annual turnover up to ` 1.5 crore in the preceding financial
year or the current financial year. As of now this facility has been given
till the quarter January-March 2019. Tax payers with annual aggregate
turnover above ` 1.5 crore will however continue to file GSTR- 1 on a
monthly basis. [Notification Nos. 57 & 58/2017 CT dated 15.11.2017, 71
& 72 /2017 CT dated 29.12.2017, 17 & 18/2017 CT dated 28.03.2018, 32
& 33/2017 CT dated 10.08.2018].

The due date of filing GSTR-1 may be extended by the
Commissioner/Commissioner of State GST/Commissioner of UTGST for a
class of taxable persons by way of a notification.

© The Institute of Chartered Accountants of India

RETURNS 10.11

A taxpayer cannot file GSTR-1 before the end of the current tax
period.
However, following are the exceptions to this rule:
a. Casual taxpayers, after the closure of their business
b. Cancellation of GSTIN of a normal taxpayer
A taxpayer who has applied for cancellation of registration will be
allowed to file GSTR-1 after confirming receipt of the application.

The details of outward supplies pertaining to the month of October
will be required to be furnished on or before 10th November and
GSTR-1 for October cannot be filed between 11th November to 15th
November.

(iv) What are the contents of GSTR-1?

CONTENTS OF GSTR- 1

Basic & Other Details Details of Outward
Supplies
•GSTIN
•B2B
•Legal name and Trade name
•B2C
•Aggregate turnover in
previous year •Zero rated and Deemed
exports
•Tax period
•Debit/ Credit notes issued
•HSN-wise summary of
outward supplies •Nil rated/ Exempted/ Non
GST
•Details of documents issued
•Amendments for prior period

•Advances received/advances
adjusted

© The Institute of Chartered Accountants of India