GST Payment – How to Pay GST Online, Rules & Formula

Pramit Pratim Ghosh |Updated on: April 14, 2023

• What is GST payment?
• GST Payment & Return Calculations
• GST payment rules
• GST payment process
• How to pay GST online?
• GST payment forms
• What are the modes of GST payments?

What is GST payment?

GST payment is the periodical remittance of GST amount payable by the business. It one of the major requisites for a business to stay compliant. As per the guidelines, every registered regular taxpayer must make GST payment with a due date – 20th of every month along with the submission of GSTR-3B return.

The GST payment can be made online - promising a seamless and transparent experience.

GST Payement & Return Calculations

In making the GST payment, the GST act allows the businesses to set the eligible input tax credit (ITC) with the output GST collected on the sales. Thus, before making GST payment, businesses need to first apply the GST payment calculations. The GST payment calculations steps are given below

• Determine the total output GST
• Determine the eligible ITC
• Set-off the output GST with the ITC. Here you need to follow the set-up order of CGST, GST and IGST.
• The balance is the GST liability that a business needs to pay.

GST payment rules

As per the GST payment rules, if a person furnishes a GST Monthly Return without paying the tax due, the return furnished will be considered as an invalid return. Without furnishing the return for a month and paying the tax due, the subsequent month’s return cannot be furnished. Also, if the tax due is not paid, interest will be applicable on the same, starting from the GST payment due date on which the tax was supposed to be paid.

Hence, it is necessary to understand the GST payment method in order to avoid the penalties of non-payment of tax.

GST payment process

GST payment ledgers

For the purpose of GST tax payment, every registered dealer will need to maintain 3 ledgers in the GST payment portal, which is the starting step of the GST payment process. The 3 ledgers are:

• Electronic tax liability register - All liabilities of a person towards tax, interest, penalty, late fee or any other amount will be debited here.
  
  
• Electronic cash ledger - Every deposit made by a person towards tax, interest, penalty, late fee or any other amount will be credited here.
  
  
• Electronic credit ledger - Input tax credit, as self-assessed and claimed in Form GSTR-2 by a person, will be credited here. This can only be used by a person - only for paying tax, and not for settling other amounts such as interest, late fee, and so on.

GST payment ledgers set-off

To pay the liabilities shown in the Electronic tax liability register, a person can use the balance in the Electronic cash ledger and Electronic credit ledger.

When liability is paid:

• The Electronic tax liability register will be credited by the amount paid.
• The Electronic credit ledger will be debited by credit used for making the payment.
• The Electronic cash ledger will be debited by the amount of deposit used for making the payment.

How to pay GST online?

Here's a step by step process for how to make your GST payment online.

• Set-off the tax liability by using the credit available in Electronic credit ledger
  
  
• Deposit money in the Electronic cash ledger to pay the balance tax liability
  
  
• Generate challan for making the GST payment - Challan for the payment can be generated from the GST payment portal using Form GST PMT-06. The details of the amount to be deposited towards tax, interest, penalty, fees or any other amount should be entered in the challan. The challan generated will be valid for 15 days
  
  
• Make the GST payment using the given modes -
  • Internet banking through authorised banks
  • Credit card or debit card through authorised banks
  • National Electronic Fund Transfer (NEFT) or Real Time Gross Settlement (RTGS) from any bank
  • Over the counter (OTC) payment through authorized banks for deposits up to Rs.10,000 per challan per tax period, by cash, cheque or Demand Draft (DD)

Note: If the payment is to be made by NEFT or RTGS, a mandate form will be generated along with the challan on the GST portal. The mandate form has to be submitted to the bank from where the payment is made. The mandate form will be valid for 15 days.

• Generation of CIN and credit to Electronic cash ledger - Once the amount paid by a dealer is credited to the concerned government account, a Challan Identification Number (CIN) will be generated and the same will be mentioned in the challan in the GST portal. On receipt of the CIN, the amount paid will be credited to the person’s Electronic cash ledger.

GST payment forms

The following GST payment forms are of importance for any dealer liable to pay GST online in India -

What are the modes of GST payments?

The two modes of GST payments are as follows.

Online mode

You can make your GST payments online by using net banking, debit card, and credit card. It is not mandatory for you to log into the GST portal to pay using the online methods. You can make an online payment using most of the popular banks in India. Once you complete the GST payment, the electronic cash ledge is instantly updated to reflect the successful payment. In the case you have not logged in but have generated challan, it is recommended that you pay as soon as you can.

Offline mode

You can pay using NEFT (national electronic fund transfer), RTGS (real-time gross settlement), or OTC (over the counter) payment methods. The OTC method includes payment using demand draft, cheque, and cash. The OTC method can take a few days and the electronic cash ledger is updated once the banks process the payment. It must be noted that the maximum amount payable using OTC is Rs. 10,000.

You must generate GST challan prior to paying using the offline modes. It doesn’t matter whether you generated the challan after logging into the portal or without logging in. You must print the challan, fill in the required details, sign, and then submit to your bank so the payment can be processed. If you use the RTGS/NEFT method then you will have an additional step which is to get the UTR (Unique Transaction Reference) number from the bank and then log into the portal to ensure the electronic cash ledger is up-to-date.

What is the time limit to finish GST Payment?

The due date for GST payment is 20 days from the end of the month.

Conclusion

In short, the GST payment process and GST payment schedule are of key importance to any business in order to remain compliant. It is thus necessary for every business to stay aware of the requisite GST payment formats, make the right GST payment calculations, adhere to the GST payment dates and accordingly pass the correct GST payment vouchers in their books, in order to make GST payment online in time, and continue their business in a hassle free manner.