Library / Goods and Services Tax: The Professional's Master Guide

25. Payment of Tax, Interest, TDS and TCS (Sections 49 to 53)

Tax is paid through three electronic ledgers maintained on the portal (section 49). The electronic cash ledger is credited by deposits through PMT-06 challans. The electronic credit ledger holds ITC. The electronic liability register records all dues, including demands.

25.1 Cash ledger, challans and PMT-09

A PMT-06 challan is valid for 15 days. Payment by net banking, UPI, card, NEFT or RTGS (or over the counter up to Rs. 10,000) credits the cash ledger under the major head (IGST, CGST, SGST, cess) and minor head (tax, interest, penalty, fee). A balance in the wrong head can be moved through PMT-09, and since the Finance Act, 2022 to a distinct person with the same PAN, if no demand is unpaid. The cash ledger can pay any liability; the credit ledger can pay only output tax.

25.2 Order of utilisation of ITC

Sections 49(5) and 49A and rule 88A lay down the order: IGST credit is used first against IGST liability, and the balance may then be used against CGST and SGST in any order. CGST and SGST credits are used only after IGST credit is exhausted, each against its own head and then IGST; they never cross. From February 2026 the portal lets the IGST balance be split between CGST and SGST in any proportion, avoiding cash payment in one head while credit lies idle in the other.

Tax payable under reverse charge must be paid in cash: the credit ledger can pay only "output tax" (section 49(4)), and output tax excludes tax payable under reverse charge (section 2(82)). Rule 86B also requires registered persons whose taxable supplies exceed Rs. 50 lakh in a month to pay at least 1% of output tax in cash, subject to exceptions.

25.3 Interest under section 50

Interest at 18% is payable under section 50(1) on tax paid after the due date, for the period of delay. Under the retrospective amendment from 1 July 2017 and rule 88B, it is on the net tax paid in cash, unless the return is filed after proceedings under section 73, 74 or 74A begin. From 10 July 2024 an amount deposited in the cash ledger on or before the due date and kept there until it is debited in the return is excluded from interest. Under section 50(3), interest at 18% is payable on ITC wrongly availed and utilised, from the date of utilisation to the date of reversal or payment. Credit is treated as utilised when the credit ledger balance falls below the wrong credit, to the extent of the fall (rule 88B(3)).

25.4 DRC-03 and DRC-03A

Voluntary payments on self-detection, in audit or against a notice are made through DRC-03. Such a payment does not by itself close a later demand. DRC-03A, introduced in 2024, links the DRC-03 payment to the demand order; without it, recovery may start on a demand already paid.

25.5 Tax deduction at source (section 51)

Government departments, local authorities, Government agencies and notified bodies (such as public sector undertakings and bodies with 51% or more Government shareholding) must deduct 2% (1% CGST + 1% SGST, or 2% IGST) from payments to suppliers of taxable goods or services where the total value of supply under a contract exceeds Rs. 2.5 lakh (excluding tax). No deduction is made where the supplier's location and the place of supply are in a State other than the recipient's State of registration. The deductor files GSTR-7 by the 10th; the supplier accepts the credit into his cash ledger.

25.6 Tax collection at source (section 52)

An e-commerce operator collecting consideration for supplies made through it by other suppliers must collect tax at 0.5% (0.25% CGST + 0.25% SGST, or 0.5% IGST) of the net value of taxable supplies, from 10 July 2024 (1% earlier). Net value is taxable supplies less returns, and excludes supplies on which the operator itself pays tax under section 9(5). The operator files GSTR-8 by the 10th; sellers accept the TCS into their cash ledger.

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