Payment of Tax under GST LAW

1. Payment of Tax under GST LAW

2. Presentation Plan • Features • Legal Provisions • Modes of Payment under GST • Maintenance of Taxpayer-wise Electronic Ledgers • Rules for Utilization of Amounts in Electronic Ledgers • ITC Utilization Rules • Rules for Discharging Liability • Provision of Interest on Delayed Payment of Tax • Provisions of TDS. • Provision w.r.t. Collection of Tax at Source. • GST Payment Process • Overview • Practical

3. Features • 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.

4. 2. Legal Provisions • Legal Provisions: Chapter X: section 49 to 53. • Principles • Ease of making payment. • Payment through cash and credit ledgers. • Chapter – X deals with payment of tax. • Section 49 pertains to payment of tax, interest, penalty, fee and other amounts. • Section 50(1)pertains to levy of interest on delayed payment of tax. • Section 51(1)pertains to tax deduction at source. • Section 52(1) pertains to collection of tax at source. • Section 53 Transfer of ITC

5. Legal provisions……contd • Payments to be made • for any intra-State supply, tax to be paid CGST & SGST • for Inter-State supply tax to be paid is IGST • 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 (TCS). • In addition, interest, penalty, fees and other payments to be made. • Liability to pay GST • Supplier of goods and services. • specified cases like imports and other notified supplies,liabilitymay be cast on the recipient under the reverse charge mechanism. • notified cases of intra-state supply of services, the liability to pay GST may be cast on e-commerce operators through which such services are supplied.

6. Legal provisions……contd • Government Departments making payments to vendors above Rs.2.5 lakh under one contract to deduct tax (TDS) and E-commerce operators to collect tax (TCS) on the net value. • Liability to pay GST is generally the earliest of the 3 events, namely receiving payment, issuance of invoice or completion of supply.

7. Modes of Payment under GST • Payment of tax, interest, penalty, fee or any other amounts can be made: • Through internet banking or by using credit card (CC) /debit cards (DC). • Through National Electronic Fund Transfer (NEFT) / Real Time Gross Settlement (RTGS) or • Over the Counter payment(OTC) through authorized banks for deposits upto Rs.10,000/- per challan per tax period, by cash, cheque or demand draft. • The date of credit to the account of the appropriate Government shall be deemed to be the date of deposit in the authorized bank.

8. Challan • Electronically generated Challan from GSTN for all 3 modes. • Contains a unique 14-digit Common Portal Identification Number (CPIN). • Who can generate Challan? • Taxpayer • His authorized representative • Departmental officers (e.g. enforcement activity) • Any other person paying on behalf of taxpayer (e.g. auction or recovery by State authorities etc.) • Certain key details of the challan like name, address, email, GSTIN of payer to be auto-populated.

9. Challan • Single challan for payment of all types of taxes. • Validity period: • 15 days • Challan would not have a jurisdictional location code. • Tax authorities would send the Taxpayers’ updated master data to GSTN as well as to Accounting Authorities. • Accounting Authorities would use the data for mapping

10. Basic Features Payment Process • Challan can be edited before finalization. • However once finalised and CPIN generated, no further changes can be made. • Time of payment:from 00:00 hrs. to 20:00 hrs. • Proposed workflow of RBI’s e-Kuber model to be followed for payment, accounting and reconciliation. • Accounting Authorities will interact directly with RBI & also with Authorized banks in case of discrepancies found during reconciliation (RBI responsible for reconciliation). • One e-FPB per Authorized Bank (in Mode I & II) / RBI (in Mode –III). • System of electronic cash ledger on GSTN for each taxpayer.

11. GST Payment • Payment of taxes by the normal tax payer on monthly basis by the 20th of the succeeding month. • Cash payments will be first deposited in the Cash Ledger and the tax payer shall debit the ledger while making payment in the monthly returns. • Payment can also be debited from the Credit Ledger. • Payment of taxes for the month of March shall be paid by the 20th of April. • Composition tax payers will need to pay tax on quarterly basis.

12. Work Flow for Payment under Mode - I E-payment mode through authorized banks (internet banking , CC/DC): • Generation of e-Challan at GSTN. • Tax payer will select e-payment mode: • Net Banking by choosing authorized bank • Credit/Debit Card of any bank by choosing payment gateway of authorized bank (or their SPVs) in case of CC/DC • Credit /Debit Card will have to be registered at GSTN - as an additional safety check to eliminate the issue of charge back in case of fraudulent use of CC/DC.

13. Payment under Mode-I ….contd. • GSTN will direct the taxpayer to the website of selected bank/payment gateway. • Alongside, GSTN will forward an electronic string to the selected bank carrying specified details of challan on real time basis. • Taxpayer will make payment using the USER ID & Password provided by his bank. • On successful completion of the transaction, e-FPB of bank will forward a confirmation electronic string in form of CIN (17 digits = 14 digit CPIN + 3 digit Bank Code) to GSTN on real time basis. • GSTN will credit the amount into Taxpayer’s cash ledger. • Copy of paid Challan to be available on GSTN for taxpayer (downloadable/printable).

14. PROCESS OF PAYMENT THROUGH E-PAYMENT- ONLINE & DC/CC Generate e-Challan (CPIN) Tax Payer 1. 3. 2. Credit Tax payer’s ledger 7. GSTN Choose payment option – Net banking or CC/DC 6. 4. Makes payment E-FPB (CIN) 5.

15. Work Flow for Payment under Mode-II i.e. NEFT/RTGS Payment through NEFT/RTGS from any bank: • Taxpayer having account in any bank having NEFT/RTGS facility can use this mode. • Beneficial to taxpayers not having a bank account in any of the Authorized Banks can use this facility. • No limit on amount to be paid through this mode. • Payments to be collected by RBI directly as RBI is banker for this facility. • RBI will perform the role of e-FPB.

16. Payment under Mode-II …cont. • Challan and NEFT/RTGS “mandate form” generated on GSTN. • Taxpayer to print a copy of Challan and NEFT/RTGS mandate form from GSTN & approach his bank for payment. • NEFT/RTGS mandate form to have validity period of CPIN printed on it. • In challan, the field for “Name of Authorized Bank” to be auto-populated as “RBI”. • NEFT/RTGS mandate form will have certain information auto-populated: • CPIN in “Account Name” field. • ‘GST Payment’ in “Sender to Receiver Information” field.

17. Payment under Mode-II …cont. • Amount indicated for remittance will be transferred by the bank to the RBI into the designated account of the government along with challan details and a Unique Transaction Reference (UTR) Number. • RBI will validate payments against each challan with UTR received from remitter bank. • RBI will report receipt of payment to GSTN in form of CIN on real time basis through an electronic string with specified details. • GSTN will credit the amount into Taxpayer’s cash ledger.

18. PROCESS OF PAYMENT THROUGH NEFT /RTGS Tax Payer Generat & print the e-Challan (CPIN) & NEFT/ RTGS mandate 1. 2. Credit Tax payer’s ledger GSTN 3. Bank 6. 4. RBI (e-FPB) 5.

19. PAYMENT THROUGH NEFT/RTGS Credit in cash ledger Generation of e-challan Taxpayer GSTN Generation of NEFT/RTGS Mandate Inform CIN Inform UTR Payment by Taxpayer RBI as e-FPB Inform UTR & transfer amount to RBI Taxpayer’sBank

20. Work Flow for Payment under Mode - III Over The Counter (OTC) Payment: • Can be made only through authorized bank. • For small taxpayers for making payment uptoRs. 10,000/- per challan - by cash / DD / cheque drawn on the same bank or on another bank in the same city. • For cheque payment, name of authorized bank & its location to be mandatorily filled in the challan. • On real time basis, GSTN will share challan details with Core Banking System (CBS) of the selected authorized bank.

21. Payment under Mode-III contd… • Taxpayer will approach the branch of the authorized bank for payment of taxes along with the instrument or cash. • In case of cash / same bank instrument a unique Bank’s Transaction Number (BTR) will be generated immediately by the authorized bank’s system and it will be given to taxpayer. • Authorized bank will send receipt information in form of CIN to GSTN on real time basis. • In case of instruments drawn on another bank in the same city, payment would not be realized immediately.

22. Payment under Mode-III contd… • Authorized Bank will inform GSTN on real time basis in two stages. • when an instrument is given OTC: to send an electronic string to GSTN containing specified details like CPIN, GSTIN, Challan Amount & Bank’s acknowledgement number. • Then, acknowledgement: after the cheque is realized with 3 additional details i.e.CIN, Date & time of Realization of Cheque and Bank Transaction Number (BTN). • Similarly, bank to issue acknowledgement to taxpayer in two stages: • Acknowledgment of chequeimmediately. • Upon realization of cheque, issuance of BTN. • GSTN will credit the amount into Taxpayer’s Cash Ledger.

23. PROCESS OF PAYMENT THROUGH OVER THE COUNTER Tax Payer Generate & print the e-Challan (CPIN) 1. 2. 3. Credit Tax payer’s ledger 7. GSTN Authorised Bank 4. 6. Makes payment through Cash/DD or Cheque e-FPB (CIN) 5.

24. CASH PAYMENT IN OTC Generation of e-challan Credit in cash ledger GSTN Taxpayer Downloading and printing Bank Transaction No. & CIN provided Bank Transaction No. & CIN provided Payment in cash Branch of Authorised Bank

25. CHEQUE PAYMENT IN OTC Generation of e-challan Credit in Cash ledger GSTN Taxpayer Downloading and printing Two way Communication Two way Communication Payment through Cheque Branch of Authorised Bank

26. Maintenance of Taxpayer wise Electronic Ledgers • There shall be three running electronic ledgers maintained on the dashboard of taxpayer by GSTN on its portal i.e. i. Tax Liability Register:Liabilities of a taxable person in the form of tax, interest, fee & penalty towards CGST, SGST & IGST is recorded and maintained in this ledger. Tax Liability Register will reflect the total tax liability of a taxpayer (after netting) for the particular month. ii. ITC ledger: Input Tax Credit as self-assessed in monthly returns will be reflected in the ITC Ledger. The credit in this ledger can be used to make payment of TAX ONLY and not other amounts such as interest, penalty, fees etc. iii. Cash ledger:The cash ledger will reflect all deposits made in cash, and TDS/TCS made on account of the taxpayer. The information will be reflected on real time basis. This ledger can be used for making any payment on account of GST.

27. Maintenance of Taxpayer wise Electronic Ledgers contd… • Details in these ledgers will get auto populated from the returns filed. • In cash ledger, details will get auto-populated from paid challan. • Both the ITC ledgers and the cash ledger will be utilized by the taxpayer for discharging the tax liabilities of the returns and others liabilities arising out of Demand / Appeal Orders. • These ledgers would be updated in real time on an activity / action by the taxpayer in connection with these ledgers. • Balance, if any, in the cash or credit ledgers may be refunded in accordance with the provisions of the Act and Rules, and the amount collected as CGST/SGST shall stand reduced to that extent.

28. Rules for Utilization of Amount in Electronic Ledger • Amount available in the electronic cash ledger under respective headmay be used for making any payment towards: • tax, • interest, • penalty, • Fees, or • any other amount payable. • Amount available in the electronic credit ledger may be used for making any payment towards: • tax.

29. ITC Utilization Rules ITC Utilization shall be made in the following order: • Section 49 (5) (a) • IGST credit to set-off IGST liability. • IGST credit, if available, to set-off CGST liability, if any. • IGST credit, if available, to set-off SGST liability, if any. • Section 49 (5) (b) in CGST Act 4. CGST credit to set-off CGST liability. • CGST credit, if available, to set-off IGST liability, if any. • Section 49 (5) (c) in SGST Act 6. SGST credit to set-off SGST liability. 7. SGST credit, if available to set-off IGST liability, if any. • Section 49 (f): No cross utilization of credit between CGST & SGST.

30. This table shows the tax liability under different circumstances-

31. Rules for Discharging Liability • Rules shall be applicable, in the following order for discharging liability of tax & other dues • self-assessed tax, and other dues related to returns of previous tax periods. • self-assessed tax, and other dues related to return of current tax period. • any other amount payable under the Act or the rules made thereunder including the demand determined under assessment/adjudication order. [Section 49 (8)]

32. Provision of Interest on Delayed Payment of Tax • Interest shall be payable in case where a person fails to pay tax or any part thereof to the Government for the period for which the tax or any part thereof remains unpaid, not exceeding eighteen per cent as may be notified. [Section 50 (1)] • Interest shall be calculated from the day succeeding the day on which such tax was due to be paid. [Section 50 (2)] • Interest shall be payablein case where taxable person makes an undue or excess claim of ITC/reduction in output tax liability at such rate not exceeding twenty-four per cent, as may be notified by the Government. [Section 50 (3)]

33. Provisions of TDS • When applicable: • Total value of supply under a contract exceeding Rs. 2.5 lakhs (excluding tax). • Who shall be the deductor? • The Central / State Government department or establishments, • Local authority, or • Governmental agencies, or • Persons / category of persons as may be notified. • Rate of TDS: • 1% from the payment made or credited to the supplier. [Section 51 (1)]

34. Provisions of TDS….cont. • Time-limit for Payment: • Within 10 days after the end of the month in which such deduction is made. [Section 51 (2)] • Certificate to the deductee: • Deductor is requiredto furnish to the deductee a certificate mentioning therein: • the contract value, • rate of deduction, • amount deducted, • amount paid to the appropriate Government and • such particulars as may be prescribed in this behalf.

35. Provisions of TDS….contd. • Time limit to furnish such certificate by the deductor to the deductee & penalty thereof: • within 5 days of crediting the amountto the appropriate Government. • If failed to furnish, he shall by way of late fee, a sum of Rs. 100/- per day from the day after the expiry of 5 day period until the failure is rectified. • Amount of late fee payable shall not exceed Rs. 5,000/-. [Section 51 (3)]

36. Provisions of TDS….contd. • Claiming credit of TDS: • Amount of TDS to be reflected in return of deductor. • Deducteeshall claim credit, in his electronic cash ledger, of the amount of TDS. [Section 51 (4)] • Interest liability on deductor: • If any deductor fails to pay amount of TDS, he shall be liable to pay: • Interest in accordance with the provisions of section 50(1) and • The amount of tax deducted. [Section 51 (5)]

37. Collection of Tax at Source • Who shall collect tax at source? • Every electronic commerce operator shall, • at the time of credit of any amount to the account of the supplier or • payment of any amount in cash or by any other mode, • whichever is earlier, • collect an amount, • out of the amount payable or paid to the supplier. • Rate of TCS: • Rate not exceeding 1 percent, as may be notified by the Central or State Government on the recommendation of the GST Council. [Section 52(1)]

38. Collection of Tax at Source ….contd. • Time-limit for Payment: • within ten days after the end of the month in which such collection is made. [Section 52 (3)] • Furnishing statement electronically: • of all amount collected toward supply of goods / services during a calendar month. • details of the amounts collected on behalf of each supplier in respect of all supplies effected through it, • within ten days after the end of such month. [Section 52(4)]

39. Collection of Tax at Source ….contd. • Claiming credit of tax collected: • Amount collected and paid to the credit of the appropriate Government shall be deemed to be a payment of tax on behalf of the concerned supplier. • Supplier shall claim credit, in his electronic cash ledger, of the tax collected and reflected in the statement filed by the operator. [Section 52 (7)]

40. Current System Vs. GST System

41. Grievance Redressal • In OTC mode: if cash ledger of taxpayer not credited within three days, he should approach bank where instrument was presented. • In RTGS/NEFT mode: if cash ledger of taxpayer is not credited within three days, he should approach bank where he has his account. • Each e-FPB required to have front end service branch to resolve payment related issues (One in each State).

42. Overview Summary of forms prescribed under GST payment rules are as follows:

43. Overview Summary of forms prescribed under GST payment rules are as follows:

44. Overview contd… • Electronic payment process- no generation of paper at any stage. • Single point interface for challangeneration – GSTN. • Ease of payment - three modes including CC/DC & NEFT/RTGS. • Common challan form with auto-population features. • Use of single challan and single payment instrument. • Common set of authorized banks. • Payment through any bank. • Common Accounting Codes.

45. Online Payment through net banking 1. Access the GSTN portal. The GST Home page is displayed. 2. Click the Login link given in top right-hand side of the GST Home page. The Taxpayer Login page is displayed

46. 3. In the GSTIN field, enter the GSTIN provided by the STC. 4. In the Type the characters as displayed below, enter the captcha text. 5. Click the PROCEED button.

47. .

48. 6. Enter amount in the Tax Liability details. Do’s:  Ensure that you have entered some amount in the Tax liability or else Generate Challan button will not be activated.  Ensure to enter very small amount like INR 10 for transaction to be successful. 7. In the Payment Modes, select the E-Payment. Note: Green tick will appear next to the payment mode after the selection. 8. Click the Generate Challan button.

50. 9. In the Enter OTP field, 10. Click the PROCEED button.