Payment of GST: Understanding the Process

Payment Of Tax Under Model GST Law

We will be discussing the payment process under GST which has undergone a change since any payments above Rs. 10,000 are mandated to be made electronically or through cheque. In order to make tax payments under GST regime, three different ledgers need to be maintained namely, electronic tax liability ledger, electronic cash ledger and electronic credit ledger. 

Let us study these ledgers in detail.
  • Electronic tax liability ledger (GST PMT1): Every taxpayer registered under GST must maintain an electronic tax liability ledger that would keep a record of an individual’s liabilities such as due tax, interest, penalty, late fee under separate heads. All the liabilities of a taxpayer are debited in the electronic tax liability ledger.
  • Electronic cash ledger (GST PMT5): Every taxpayer registered under GST must maintain an electronic tax liability ledger that would keep a record of an individual’s each deposit made towards tax, interest, penalty, late fee under separate heads. All deposits made against liabilities of the taxpayer would be credited in the electronic cash ledger. 
  • Electronic credit ledger (GST PM2): Input tax credit (ITC) shall be credited in the electronic credit ledger which has been claimed by a taxpayer in Form GSTR-2. It can be availed by a taxpayer only for payment of tax and not payments of interest, late fee and so on. 

Under the GST regime, all payments must be made by using input tax credit which is available in both electronic credit ledger and electronic cash ledger. When a payment is made:
  • The electronic tax liability register is credited with the amount of payment made
  • The electronic credit ledger is debited with the credit used for making the aforesaid payment
  • The electronic cash ledger will be debited by the deposit amount used for making the aforesaid payment
Usage of ITC for Payment of Tax Liability

IGST: ITC or input tax credit is employed for payment of IGST, afterwards the remaining ITC can be used for payment of tax liability pertaining to CGST and SGST. 
CGST: ITC can be used for making liability payments under CGST but not pertaining to SGST.
SGST: ITC can be used for making liability payments under SGST but not pertaining to CGST.

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