Payment of Tax - Unit 1 and Unit 2

Question 1

What is the definition of output tax as per section 2(82)?

Answer 1

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)].

Question 2

What is the definition of Valid return as per section 2(117)?

Answer 2

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

Question 3

What are the modes of deposit in the electronic cash ledger as per the provisions of [SECTION 49(1) & (3) READ WITH RULE 87 OF CGST RULES?

Answer 3

• The deposit in the electronic cash ledger shall be made through any of the following modes, namely:-
  (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
• Over the Counter payment through authorized banks for deposits up to ten thousand rupees per challan per tax period, by cash, cheque or demand draft:(There are exceptions to this one rule)

Question 4

What are CPIN, CIN, BRN and E-FPB?

Answer 4

Question 5

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

Answer 5

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

Question 6

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

Answer 6

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

Question 7

What are certain other miscellaneous aspects relating to the challan? like the procedure from generating challan to amounts being credited in the electronic cash ledger?

Answer 7

Question 8

What is the manner of utilization in relation to the payment of tax which is reflected in the electronic cash ledger? -Sub-section 3 of section 49

Answer 8

• In the e-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(This will be used for the payment of taxes accordingly).

Question 9

What is the procedure for transfer an amount from one (major/minor) head to another (major/minor) head in the electronic cash ledger? - sub-sections (10) and (11) inserted in section 49 of the CGST Act, 2017

Answer 9

• The amount available in the electronic cash ledger can be utilised for payment of any liability for the major and minor heads.
• For instance, if the registered person has made a deposit of tax erroneously i.e. by virtue of human error, under a particular head instead of a specific head, the same can be transferred to the respective intended head vide Form GST PMT-09.

Question 10

When can GST PMT-09 form can be used to transfer an amount from one (major/minor) head to another (major/minor) head in the electronic cash ledger as per sub-sections (10) and (11) inserted in section 49?

Answer 10

• This Form can be used either for
  (i) transfer of erroneous deposits under any minor head of a major head to any other minor head of same or other major heads or
  (ii) transfer of any of the amounts already lying unutilised under any of the minor heads in Electronic Cash ledger.

Question 11

Is automatic updation of the amount of TDS under section 51 or TCS under section 52 in the electronic cash ledger provided as per the act?

Answer 11

There is no automatic updation of this deduction/collection currently on the common portal. Similar to a claim of TDS credits under Income Tax Act, 1961 at the time of filing Income tax return, the Registered person has to claim for the TDS/TCS in his periodical returns to get updated in the Electronic Cash ledger.

Question 12

Whether ITC available in the electronic credit ledger be utilised for payment of tax liability under reverse charge mechanism?

Answer 12

ITC available in Electronic Credit ledger, cannot be utilised for tax payable under reverse charge mechanism under Section 9(3) or 9(4) of CGST/SGST Act, 2017 read with Section 5(3) or 5(4) of IGST Act, 2017.

Question 13

What is the manner of utilisation of ITC [Combined reading of section 49(5), 49A, 49B, rule 88A and Circular No. 98/17/2019 GST dated 23.04.2019?(This was already seen detailed in the ITC chapter itself and it is just to re iterate the same )

Answer 13

Question 14

What happens to the amount already credited in the electronic credit ledger when a refund is made out of it or refund request was cancelled after the same was debited from the ECL?

Answer 14

• 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

Question 15

What is the order of discharge of tax and other dues in the electronic liability ledger as per sub section 8 of section 49?

Answer 15

Question 16

What does a debit to the electronic liability ledger mean?

Answer 16

It basically means that we are debiting the payables and when it actually paid we give a corresponding credit in the electronic liability ledger and the debit for this goes either in the electronic cash or the credit ledger.

Question 17

What are some provisions regarding interest on delayed payment of tax as per the provisions of section 50? specifically what is the amount of which the interest on belated filing of tax return and payment of tax thereon is to be computed?

Answer 17

• Under GST law, a registered person, can make the payment of tax through electronic credit ledger or electronic cash ledger in terms of section 49 of CGST Act, 2017.
• balance in electronic credit ledger is exhausted first before utilizing the balance available in the electronic cash ledger.
• a proviso has been inserted under Section 50 to provide that when a registered person has paid his taxes through a return specified under Section 39 of CGST Act, 2017 belatedly,
• interest shall be applicable only on the net
  taxes paid(Paid through cash) through electronic cash ledger and not on the gross taxes paid for such tax period.
• The liability for interest can be settled by adjustment with balance in Electronic Cash Ledger but not with balance in electronic credit ledger(Rate of interest, if any not to exceed 18% accordingly)
  *

Question 18

Who are the persons mandated by the provisions of section 51 to deduct tax at source compulsorily by the central government?

Answer 18

Question 19

Under the mandatory list of persons who has to deduct TDS, who are the authorities under the head central/state government department or establishment required to deduct tax under section 51 and what are the threshold limits for applicability?

Answer 19

• an authority or a board or any other body, -
  (i) set up by an Act of Parliament or a State Legislature; or
  (ii) established by any Government,
• *with 51% or more participation** by way of equity or control, to carry out any function;(This 51% condition is applicable for both the items under 1 and 2.
• society established by the Central Government or the State Government or a Local Authority under the Societies Registration Act, 1860;
• public sector undertakings

Question 20

What are the categories of persons who are not liable to deduct TDS under section 51?

Answer 20

• When goods and/or services are supplied from a public sector undertaking (PSU) to another PSU, whether or not a distinct person.
• When supply of goods and/or services takes place between one person to another person specified in clauses (a), (b), (c) and (d) of section 51(1) of the CGST Act(See mandatory registration provisions under section 51)

Question 21

What is the standard rate of deduction of TDS under section 51? and what is the threshold value of taxable value of supply of goods and services for eligibility for tax deduction under section 51?

Answer 21

• The tax would be deducted @ 1% under CGST Act, 2017(This will be 2% in case of IGST act) of the payment made to the supplier (the deductee) of taxable goods and/or services, where the total value of such supply, under a contract, exceeds ` 2,50,000.
• The above 250,000 has to exclude the amount of central tax, state tax and UT tax, integrated tax and cess provided for in the invoice).
• Individual supplies may have values less than 250,000, but we have to see the applicability in aggreagate on the total value of all the supplies to the specified supplier under a contract.

Question 22

What are certain scenarios where even when the value seems to exceed 250,000 under the contract and done by eligible persons, we need not deduct TDS?

Answer 22

The Proviso to Section 51(1) lays down that when the location of the supplier and the place of supply is in a State/ Union territory which is different from the State/ Union territory of registration of the recipient, there will be no TDS.

The above is essentially an intra state supply and central and state tax would be levied on the same.

In such case, transfer of TDS (Central tax + State tax of State B) to the cash ledger of the supplier (Central tax + State tax of State A) would be difficult. So, in such cases, TDS would not be deducted.(See example given in the book, to gain more clarity on this point)

Question 23

What is the time limit for deposit of TDS with the government by the deductor?

Answer 23

The amount of tax deducted at source should be deposited to the Government account by deductor by 10th of the succeeding month.

Question 24

What is the prescribed for for TDS certificate that has to be issued by the deductor to the deductee?

Answer 24

The content of Form GSTR 7A (TDS Certificate)

Question 25

What are the consequences when the TDS certificate is not filed within 5 days with the deductee as aforesaid?

Answer 25

If the deductor does not furnish the certificate of deduction-cum- remittance within 5 days of the remittance, the deductor has to pay a late fee of ` 100/day from the expiry of the 5th day until the day he furnishes the certificate. This late fee would not be more than ` 5000/-.

he is liable to pay penal interest under Section 50 in addition to the amount of tax deducted.

Question 26

Where will this amount of TDS deducted be reflected - for both deductor and deductee and how does the government ensure that both the parties are kept in check?

Answer 26

• The amount of tax deducted is reflected in
   Electronic Cash Ledger of deductee(The deductee can claim credit of the tax deducted, in his electronic cash ledger.)
   Return filed by deductor under section 39(3).[GSTR-7]
• Government to cross check whether the amount deducted by the deductor is correct and that there is no mis-match between the amount reflected in the electronic cash ledger and the amount shown in the return filed by deductor.

Question 27

What are the provisions for refunds of TDS on excess/erroneous deduction?

Answer 27

The deductor or the deductee can claim refund of excess deduction or erroneous deduction. The provisions of section 54 relating to refunds would apply in such cases. However, if the deducted amount is already credited to the electronic cash ledger of the supplier, the same shall not be refunded.

This is a very important conditions and could easily be forgotten sometimes.

Question 28

Who are the persons liable to collect TDS under section 52?

Answer 28

Every Electronic Commerce Operator (ECO), not being an agent, has been mandated to collect tax at source (TCS) on the net value of taxable supplies [supplies net of returns if any] made through it by suppliers, where the ECO collects the consideration on behalf of the supplier for such supplies.

Question 29

What is the meaning of Net value of taxable supplies(Net of returns) as per section 52? and what is the Rate of TCS that has to be deducted under section 52?

Answer 29

• Half percent of the net value of intra-State taxable supplies. 1% of the net value of inter-State taxable supplies(It may be noted that Section 20 of IGST Act provides that in case of tax collected at source, the operator shall collect tax at such rate not exceeding two per cent - This is the upper limit, but the rate that has been notified is only 1 %)

Question 30

What are the requirements to deposit such TCS with the government? what are the time limits?

Answer 30

The TCS amount collected by the ECO has to be remitted to the Government Treasury within 10 days after the end of the month in which the collection was made.

Question 31

What are the requirements for filing Filing of Monthly & Annual Statements by ECO?

Answer 31

• An electronic statement has to be filed by the ECO containing details of the outward supplies of goods and/ or services effected through it, including the supplies returned through it and the amount collected by it as TCS during the month within 10 days after the end of the each month in which supplies are made.
• Additionally, the ECO is also mandated to file an Annual Statement on or before 31st day of December following the end of the financial year.
• The Commissioner has been empowered to extend the due date for furnishing of monthly and annual statement by the person collecting tax at source.

Question 32

What are the actions of the operator when a notice is issued on him by An officer not below the rank of Deputy Commissioner?

Answer 32

• asking him to furnish details relating to volume of the goods/services supplied, stock of goods lying in warehouses/godowns etc.
• The operator is required to furnish such details within 15 working days.
• In case an operator fails to furnish the information, besides being liable for penal action under section 122, it shall also be liable for penalty up to ` 25,000.

Question 33

Who is liable to pay GST? First tell under general circumstances and then under certain special circumstances?

Answer 33

General Circumstance - The Supplier of goods or services is liable to pay GST.

Specific Circumstance

Import supplies – Recipient of goods or services has to pay tax under reverse charge.

The Government may, on the recommendations of the Council, by notification, specify categories of services the tax on intra-State supplies, of which shall be paid by the electronic commerce operator, if such services are supplied through it.

TDS – If total value of supply under contract > ` 2.5 lakhs, then Central and State Government, Local authority, Government agencies is liable to deduct TDS and pay the same to the Government.

TCS - E-commerce operators are required to collect tax (TCS) on the aggregate value of supply reduced by returns in a month.