GST Basics #18: Section 49 — Paying the Tax and the Three Ledgers

Every rupee of GST you pay passes through one of three accounts the portal keeps for you. What the cash ledger, the credit ledger and the liability register each do, and the order in which your input tax credit must be used.

Every rupee of GST you pay passes through one of three accounts the portal keeps for you. Section 49 is the provision that creates them and tells you how they work.

The electronic cash ledger is your money. You put money into it by generating a challan on the portal - Form GST PMT-06 - and paying it by net banking, over the counter at an authorised bank, or by NEFT or RTGS or card. The amount shows up once the bank's challan identification number reaches the portal, which is immediate for net banking and can take a day for a card payment. The ledger is divided into four major heads - IGST, CGST, SGST or UTGST, and cess - and each of those is divided again into tax, interest, penalty, fee and others. Money sitting under one head cannot pay a liability under another. A thousand rupees lying under IGST tax can only pay IGST tax; if it is in the wrong box you move it with Form GST PMT-09. Nothing is applied automatically either - until you debit the ledger against a particular liability, the balance simply sits there. TDS and TCS deducted by your customers arrive here as if you had deposited cash, and a balance you no longer need can be claimed as a refund.

The electronic credit ledger is your input tax credit. It is not money, and it can only pay tax. Interest, penalty and late fee have to come out of cash. So does tax under reverse charge, as instalment #8 explained.

The order in which credit is set off is not your choice. IGST credit must be exhausted first: it goes against IGST liability, and whatever remains may be applied to CGST or SGST in any order you like. Only then may CGST credit be used, against CGST and then IGST, and SGST credit against SGST and then IGST. CGST credit can never pay SGST, or the other way round. CBIC explained this in Circular No. 98/17/2019-GST dated 23 April 2019, at https://cbic-gst.gov.in/pdf/Circular-98-17-2019-GST.pdf

The third account is the electronic liability register - what you owe. Part I carries the liabilities arising from your returns, Part II the demands raised by assessment, adjudication and appellate orders. Filing a return posts the tax here, and it is discharged by debiting the credit ledger and the cash ledger. To pay something before a demand is formally raised, you use Form GST DRC-03.

Read the three together and the payment mechanism is plain: what you owe on one side, credit and cash on the other, and a rule about which of them may pay what. Instalment #17 covered the returns that create the liability; this is where it is settled.

The portal's own guides are at https://tutorial.gst.gov.in/userguide/ledgers/Electronic_Cash_Ledger.htm and https://tutorial.gst.gov.in/userguide/ledgers/Electronic_Credit_Ledger.htm

Topics:GST BasicsSection 49electronic cash ledgerelectronic credit ledgerliability registerPMT-06PMT-09DRC-03ITC set offChennai GSTTamil Nadu

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