Are GST Payments Taxable? Top 25 Points You Need to Know!
Many people are yet to understand what GST and its components are all about. Many questions are asked and what are its implications. A question that is frequently asked is “are GST payments taxable?”
The Goods and Services Tax (GST) is an indirect tax paid on the sale of goods and services in India. It is a multistage, destination-based tax: comprehensive because, with the exception of a few state levies, it includes nearly all indirect taxes. The GST is a multi-stage tax that is imposed at each stage of the manufacturing process, but it is intended to be refunded to all parties involved in the manufacturing process other than the final consumer, and it is collected at the point of consumption rather than the point of origin, as previous taxes were.
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Now, let us take a look at the top 25 important points about Tax Payments under GST one must know.
1. The type of payments to be made in the GST regime
For every intra-state supply under the GST regime, the Central GST (CGST, which goes into the Central Government’s account) and the State GST must be paid (SGST, going into the account of the concerned State Government). Integrated GST (IGST), which includes both CGST and SGST components, is the tax to be paid on an inter-state supply. This is one of the important points about tax payments under GST.
Additionally, some types of registered persons will be obliged to pay Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) to the government account. Interest, Penalty, Fees, and any additional payments will be required to be made wherever applicable.
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2. Time of GST payment to be done by a taxable person
When supplying goods, as described in Section 12, and when supplying services, as described in Section 13. The earliest of the three events, namely receiving payment, issuing an invoice, or completing the supply, determines the time. The aforementioned sections have explained various scenarios as well as various tax points.
3. The Main Features of The GST Payment Process
The following features will be included in the processes of tax payments under GST:
- Electronically produced challans from the GSTN Common Portal are utilized instead of manually prepared challans in all modes of payment.
- Facilitation for the taxpayer by allowing them to pay their taxes whenever and wherever they want
- It is possible to make payments online, which is very convenient.
- Data on tax collection that is also logical as well as accessible in electronic format
- Tax income is remitted to the government account more quickly
- Transactions are completed without the use of paper
- Accounting and reporting must be completed as soon as possible
- All receipts are reconciled electronically
- Banks’ procedures have been simplified
- Digital Challan warehousing
4. Time Period for Payment of Taxes to Be Made by The Supplier
Taxes must be paid on a monthly basis by the 20th of the following month by the average taxpayer. Payment can also be debited from the Credit Ledger, as previously mentioned. Taxes for March must be paid by the 20th of April. Composition taxpayers will be required to pay tax quarterly. Payment will be made between 0000 Hrs and 2000 Hrs.
5. Payment of Tax Not Made but Return Filed by A Taxable Person
In such cases, the return is not regarded as valid. Section 27 (3) of the MGL states that a taxable person’s return will not be considered valid unless the full tax due on the return has been paid. Only the valid return would be used to grant the recipient an input tax credit (ITC). In other words, the recipient’s ITC will not be confirmed until the supplier has paid his entire self-assessed tax and filed his return, and the recipient has filed his return.
Section 28 states that a taxable person who has not filed a valid return will be unable to use such credit until he has satisfied his self-assessed tax liability.
6.The Tax Payment Deadline Cannot Be Extended or Paid in Monthly installments
In the case of self-assessed liability, the time limit for payment of tax cannot be extended, nor can it be paid in monthly installments. In other cases, the competent authority has been given the authority to extend the deadline or allow for payment in installments. (MGL, Section 55). This is one of the important points regarding tax payments under GST that the readers must know.
7. Entities Liable to Pay GST
In general, the seller of goods or services is liable to pay GST. However, in some circumstances, such as imports and other registered supplies, the recipient may be held liable through the reverse charge system. Furthermore, in some circumstances, the third party has the financial responsibility (say in the case of an e-commerce operator responsible for TCS or the Government Department responsible for TDS).
8. The Date of Deposit of Tax Dues Is the Date of Payment by Check or Credit of The Money in The Government Account.
The date on which the Government account was credited is considered.
Each taxpayer must have an electronic tax liability register. When a taxpayer signs up for the Common Portal (GSTN), two e-ledgers (Cash and Input Tax Credit) and an electronic tax obligation register are opened and shown on his dashboard.
10. Methods of Payment to Be Done
Tax payments under GST are possible by the following methods:
- Only tax can be paid by debiting the taxpayer’s Credit Ledger on the Common Portal. In the credit ledger, interest, penalties, and fees cannot be paid by debit. Taxpayers will be able to take credit for taxes paid on inputs (input tax credit) and use it to pay output tax. However, no CGST input tax credit may be used to offset SGST payments, and vice versa. The IGST credit would be allowed to be used to pay IGST, CGST, and SGST in that order.
- In cash by debiting the taxpayer’s Cash Ledger on the Common Portal. Money can be deposited through a variety of methods, including E-Payment (Internet Banking, Credit Card, Debit Card); Real Time Gross Settlement (RTGS)/National Electronic Fund Transfer (NEFT); and Over the Counter Payment in branches of banks authorized to accept GST deposits.
11. ITC Ledger
Input Tax Credit will be reflected in the ITC Ledger as self-assessed in monthly returns. The credit in this ledger can only be used to pay taxes, not other amounts like interest, penalties, or fees.
12. Tax Liability Register
The Tax Liability Register will show a taxpayer’s total tax liability (after netting) for the month.
13. The linkage between GSTN and Authorized Banks
The GSTN and the Bank’s Core Banking Solution (CBS) will have a real-time two-way connection. The CPIN is instantly transmitted to the Bank for verification and payment by electronic string, and the Bank will send a challan identification number (CIN) to the Common Portal verifying payment receipt.
14. Cash Ledger
All cash deposits and TDS/TCS made on the taxpayer’s behalf will be recorded in the cash ledger. On a real-time basis, the information will be reflected. Any payment on account of GST can be made using this ledger.
15.Create or Modify the GST Challan
A taxpayer can use the GSTN portal to generate a challan for tax payment. The taxpayer or his authorized representative must enter the payment information. It is possible to partially fill out the challan form and then “save” it for completion at a later time. Before finalizing a saved challan, it can be “edited.” The challan will be generated once the taxpayer has completed it. The remitter will be able to print the challan for his records.
It should be noted that once a challan is generated online, it cannot be changed. He can save the challan in the middle for later editing. However, once the challan has been finalized and the CPIN has been generated, the taxpayer cannot make any further changes to it. This is one of the vital things to remember about tax payments under GST.
16.Validity Period of Challan
A challan has a validity period of fifteen days after it is generated, after which it is purged from the system. The taxpayer, on the other hand, can generate a new challan whenever he wants.
CPIN is an abbreviation for Common Portal Identification Number (CPIN), which is assigned at the time of challan generation. The challan is identified by a 14-digit unique number. As previously stated, the CPIN is valid for 15 days.
18. CIN and Its Relevance
CIN is an abbreviation for Challan Identification Number. It is a 17-digit number consisting of a 14-digit CPIN and a 3-digit Bank Code. CIN is produced when payment is received by approved banks or the Reserve Bank of India (RBI) and credited to the proper government account kept with them. It denotes that the payment was received and credited to the appropriate government account. The authorized bank sends the CIN to both the taxpayer and the GSTN.
19. Tax Payments under GST, in the Order in Which They Are Due If the Taxpayer Owes Money from Previous Months.
When a taxpayer’s tax liability extends beyond the current return period, Section 35(8) prescribes an order of payment. In such a case, the following payment sequence should be followed: first, self-assessed tax and interest for the previous period; then, self-assessed tax and interest for the current period; and finally, any other amounts payable, including any confirmed demands under section 51. This is the apt sequence that must be followed at all times.
E-FPB is an abbreviation for Electronic Focal Point Branch. These are authorized bank branches that are authorized to collect GST payments. For pan-India transactions, each authorized bank will designate only one branch as its E-FPB. The E-FPB will be required to open accounts for all governments under each major heading. For each State and UT government, a total of 38 accounts (one for CGST, one for IGST, and one for SGST) will need to be opened. Any GST receipts received by such E-FPB will be credited to the relevant E-FPB account. RBI will serve as the E-FPB for NEFT/RTGS transactions.
21. Pre-registration of A Credit Card on The GSTN Site Is Required for GST Payment
The taxpayer would be required to pre-register his credit card from which the tax payment is to be made. To improve the convenience of doing business, credit card payments might therefore be permitted without any monetary restriction.
22. TDS under the GST Regime
TDS stands for Tax Deducted at Source (TDS). Section 37 states that this provision is intended for the government, government undertakings, and other notified entities that make contractual payments to suppliers above Rs.10 lakhs. When making such a payment, 1 % of the total payable amount shall be deducted by the concerned Government/authority and remit it to the appropriate GST account.
23. Suppliers While Filing His Return Will Be Able to Account for This TDS
Any TDS amount shown will be reflected in the supplier’s electronic cash ledger. He can use this money to pay off his tax debts, interest charges, and other debts.
24. ‘TDS Deductor’ Can Account for Such TDS
Such TDS will be accounted for by the TDS Deductor in the following ways:
- Section 19 read with Schedule III of the MGL requires such deductors to be registered
- Following the month in which the TDS was collected and reported under GSTR 7, they must remit any TDS collected by the 10th day of the month.
- The TDS amount deposited will be reflected in the supplier’s electronic cash ledger
- They must provide a certificate of such TDS to the deductor within 5 days of deducting TDS, failing which such deductors would be charged Rs.100 per day, up to a maximum of Rs.5000
25. Tax Collected at Source (TCS)
This provision applies only to E-Commerce Operators as defined in section 43C of the MGL. At the time of making actual payment to the supplier, every E-Commerce Operator must withhold a percentage (to be notified later on the GST Council’s recommendation) of the amount due from him to the supplier. Such withheld amount must be deposited into the appropriate GST account by the 10th of the following month by such an E-Commerce Operator. The amount deposited as TCS will be recorded in the supplier’s electronic cash ledger.
Frequently Asked Questions:
- Who is liable to pay GST?
- All the service providers or distributors of goods have to pay GST.
- Can a person pay GST in installments?
- If someone is unable to pay the entire amount of GST at a time, a letter can be written requesting the commissioner to allow the person to pay GST in installments.
- Is GST a form of direct tax?
- GST is considered to be an indirect tax. Income tax can be considered to be a direct tax.
These are the top 25 points one may consider as the most important points about Tax Payments under GST. This list will help people understand what Tax Payments are there under GST and if one needs to pay taxes for GST payments or not.