One of the advantages of the GST regime is that tax payments can be made online. Each registered taxpayer receives an electronic credit ledger in GST and two electronic ledgers to make the GST payment process more accessible. Among these ledgers are:
- Electronic Cash Register
- Credit ledger in electronic form
The cash available to settle the tax liability is reflected in the electronic cash ledger. On the other hand, the Electronic liability ledger displays the amount of tax owed by the taxpayer. Finally, the electronic credit ledger shows the registered taxpayer’s available input tax balance.
Understanding GST Payments
To begin with the GST payment, the taxpayer creates a challan in the form GST PMT – 06 and submits it. This challan specifies the amount to be deposited for tax, interest, penalty, fees, or other purposes. It is also only valid for 15 days.
As a result, after generating the challan, the taxpayer deposits the tax amount at the common portal. After that, the collecting bank induces the CIN (Challan Identification Number). This number can be found on the GST Payment Receipt. As a result, the amount deposited is credited to the taxpayer’s electronic cash ledger on whose behalf the payment was made. It occurs only after the CIN is received.
Tax payments are now made as follows:
- For intra-state supplies, both CGST and SGST are paid in equal proportions.
- IGST is levied on inter-state supplies.
Rules for GST payment of Electronic Credit Ledger
- On the common portal, the electronic credit ledger in the form GST PMT – 02 must be kept. This ledger records the amounts credited against each input tax credit claim made under the act.
- This ledger is debited so that the liability is set off or discharged using the available credit.
- In some cases, a registered taxpayer may request a refund of any unused input tax credit from the electronic credit ledger. In such case, the electronic credit ledger is debit to the extent of the claimed refund. However, there are times when a taxpayer’s refund is rejected, either entirely or partially.
- Aside from the rules stated above, direct entries into the electronic credit ledger are not permitted under any circumstances.
- If there is a discrepancy in the electronic credit ledger, the registered person reports it to the appropriate officer. This communication is made using the common portal’s GST PMT – 04 forms.
As a result, ITC is used in the following order to offset CGST liability:
- ITC under CGST is used to offset CGST output liability.
- The remaining CGST output liability is then offset using ITC under IGST.
- Furthermore, ITC is used in the following order to offset SGST liability:
- Under SGST, ITC is used to offset SGST output liability.
- The remaining SGST output liability is then offset using ITC under IGST.
Finally, ITC is used to offset the IGST liability in the following order. Under IGST, ITC is used to offset IGST output liability. Under CGST, ITC is used to offset the remaining IGST output liability. Finally, ITC under SGST is applied to offset the remaining IGST output liability. Furthermore, there is no set-off between CGST and SGST. To know what is gstr 4, click here.
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Review Understanding Electronic Credit Ledger in GST.