What Is GST Payable? Meaning, Calculation, Due Dates and Payment Process

Goods and Services Tax (GST) payable is the net tax liability that a registered business must pay to the government after adjusting the eligible Input Tax Credit (ITC) against its output tax liability.

GST payable is calculated by determining the tax on taxable supplies and adjusting eligible ITC under the applicable utilisation rule. The balance must be paid within the prescribed due date. Understanding how GST payable is calculated and paid helps businesses avoid penalties while complying with GST provisions and maintaining accurate tax records.

How is GST payable calculated?

GST payable is calculated by determining the GST on taxable supplies and deducting ITC according to the applicable utilisation rules.

The formula to calculate GST payable is:

GST Payable = Output Tax Liability – Input Tax Credit

Step 1: Calculate GST on taxable sales

The GST calculation depends on whether the price is exclusive of GST or already includes GST.

Step 2: Determine your eligible input tax credit (ITC)

Next, calculate the ITC that the business can claim for the tax period. For example, a business may have ₹3,600 in eligible ITC from GST paid on qualifying business purchases and expenses.

Businesses should not treat every amount of GST paid on purchases as automatically available for credit. The eligibility of the credit must be checked under the applicable GST provisions. Restricted or ineligible credits must not be included in the amount used to reduce the output tax liability.

Step 3: Adjust ITC against your GST liability

After determining the eligible ITC, the available credit is used against eligible tax liabilities according to the applicable utilisation rules.

For example, the calculation may be:

• Output tax liability: ₹9,600
• Eligible ITC: ₹3,600

Net GST Payable = Output tax liability – ITC 

= ₹9,600 – ₹3,600 = ₹6,000

The actual utilisation of ITC depends on the type of credit and tax liability. Integrated Goods and Services Tax (IGST), Central Goods and Services Tax (CGST), State Goods and Services Tax (SGST) and Union Territory Goods and Services Tax (UTGST) credits cannot be used interchangeably in every situation.

ITC cannot be used to pay interest, late fees or penalties, and tax under reverse charge must be in cash. ITC on such tax may be claimed later, subject to eligibility.

Step 4: Pay the remaining GST liability

After eligible ITC is utilised, the remaining tax liability is paid through the Electronic Cash Ledger. The taxpayer deposits the required amount into the relevant cash ledger and uses it to discharge the applicable liability.

From the above example, the ₹6,000 remaining liability can be paid using the balance available in the Electronic Cash Ledger.

The Electronic Credit Ledger records ITC, while the Electronic Cash Ledger records cash deposits. A cash deposit alone does not automatically count as payment against a specific liability. The taxpayer must debit the relevant ledger against that liability.

When is GST payable?

The due date for paying GST depends on the taxpayer category and the return or payment method followed.

GST payment due dates

What to remember:

• For QRMP taxpayers, the due date for quarterly Form GSTR 3B depends on the location of the principal place of business. Although returns are filed quarterly, QRMP taxpayers generally make tax payments monthly during the quarter.
• Delayed GST payments attract 18% annual interest under Section 50 of the CGST Act, 2017, along with a late fee under Section 47. The fee is ₹50/day for non-nil returns and ₹20/day for nil returns, subject to prescribed caps.
• Late filing of non-nil returns also incurs a ₹50 per day fee, subject to turnover-based caps under Section 47 and Notification No. 20/2021-Central Tax.
• Separately, where ITC has been wrongly availed and utilised, interest is payable under Section 50(3) at the notified rate, which may be up to 24% per annum, as prescribed by the Government. 
• The 20th is not the GST deadline for everyone, as it depends on the taxpayer category and filing cycle.

How do you pay GST online?

Businesses can pay GST online by generating a Form GST PMT-06 challan, making the payment and using the deposited amount to discharge their GST liability. 

1. Visit the GST Portal: Go to the GST Portal and log in using your registered taxpayer credentials.
2. Open the payment section: Go to Services. Click on Payments, then click Create Challan to start the GST payment process.
3. Enter the tax details: Enter the applicable tax amount along with interest or penalty, where applicable.
4. Select a payment method: Select internet banking, NEFT, RTGS, over-the-counter payment or Unified Payment Interface (UPI), where permitted.
5. Generate the challan and make the payment: Generate Form GST PMT 06, note the Common Portal Identification Number (CPIN) and complete payment using the selected method.
6. Check the payment status: After a successful payment, the Challan Identification Number (CIN) is generated and the amount is reflected in the Electronic Cash Ledger.
7. Download the payment receipt: Navigate back to the challan history, select your paid challan and download the official payment receipt for your financial records.
8. Offset your liabilities and file returns: Go to your return dashboard (e.g. GSTR-3B) and use the updated Electronic Cash Ledger balance to offset your liability. This completes your monthly or quarterly filing.

Conclusion

GST payable is a tax liability that depends on accurate sales records, eligible ITC and timely compliance. When invoices, purchase records and tax ledgers are maintained accurately through the year, the GST liability calculated for a period matches the books, leaving fewer surprises at filing time.

TallyPrime supports this process by helping businesses record GST transactions as they happen, track tax liabilities and generate GST reports directly from accounting data already in the system. This makes the process of managing GST payable more efficient. Start your free trial today and manage your GST payable with greater ease.