In this guide, we shall be covering several topics regarding GST payments and refunds.

1. Payments:

A. What are the different payments to be made under GST?
B. How to calculate the GST payment to be made?
C. Who should make the GST payment?
D. When should the GST payment be made?
E. What are the different types of ledgers?
F. How to make GST payment?
G. Is there a penalty for delayed GST payment?

2. Refunds:

A. What is a GST refund?
B. When can be the GST refunds claimed?
C. How to calculate GST refund?
D. What is the time limit for claiming the refund?
E. How to claim GST refund?

Payments

A. What are the different payments to be made under GST?

Under the GST law the tax to be paid is mainly of 3 types-

IGST(Integrated Goods & Service Tax) – To be paid to the Central Govt. when interstate supply is made(paid to the Central Govt.)

CGST(Central Goods & Service Tax) – To be paid when making supply within the state (paid to the Central Govt.)

SGST(State Goods & Service Tax) – To be paid when making supply within the state (paid to the State Govt.)

Other than these 3 major types of payments, a registered dealer would also need to pay the following types of payments:

TDS(Tax Deducted at Source)  – TDS is a tax which is deducted by the dealer right before a payment is made to the supplier.

TCS(Tax Collected at the Source) – TCS is a tax that is made by the dealer that sells through online and would get the payment after deduction of 2% tax. 

Reverse Charge – In most cases, the supplier of goods or services pays the tax on supply. But with Reverse Charge,  the charge-ability gets reversed and the receiver becomes liable to pay the tax.

B. How to calculate the GST payments that are to be made?

Calculations are done in a different ways for different types of dealers –

Regular Dealer

The Goods and Service Tax(GST) payable by a regular dealer is the difference between the Input Tax Credit(ITC) and the Outward Tax Liability

Composition Dealer

A dealer operating under the composition scheme has to pay a fixed percentage on the total outward supplies made. Below is the applicable percentage for composition scheme for different types of dealers-

For Manufacturer = 0.50%(CGST) + 0.50(SGST) = 1% of turnover of State/ Union Territory

For supplier supplying food other than alcoholic liquor for human consumption = 2.5% (CGST)+ 2.5% (SGST) = 5% of turnover of State/ Union Territory

For other supplier = 0.50% (CGST) + 0.50% (SGST) = 1% of taxable turnover of State/ Union Territory

C. Who should make the GST payment?

GST payments are to be made by the following types of dealers:

  1. A Registered dealer if GST liability exists.
  2. Registered dealer under Reverse Charge Mechanism(RCM).
  3. E-commerce operator is supposed to collect and pay TCS
  4. Dealers required deducting TDS

D. When should the GST payment be made?

The GST payment is to be made by every 20th of the next month, i.e. when the GSTR 3 is to be filed.

E. What are the different types of ledgers?

There are 3 types of ledgers of that are maintained on the official GST portal.

  1. Cash Ledger- The cash ledger reflects all the payments that are made in cash and Tax Deducted on Source(TDS) or Tax Collected at Source(TCS) made on the tax payer's account.
  2. Credit Ledger - The credit ledger reflects self-assessed Input Tax Credit in monthly return.
  3. Liability Ledger - A liability ledger reflects the post netting tax liability of a taxpayer. 

F. How to make GST payment?


The GST payment can be made in the two following ways - 

  1. Through Cash Ledger - GST payment can be made both online or offline. But for either online or offline GST payment, a challan has to be downloaded from the GST portal.
  2. Through Credit Ledger - The credit of Income Tax Credit(ITC) can be taken by the dealers for the GST payment. It is important to note that the credit amount can only be used for GST payment and not for other payments such as interest, penalty fees, etc.

G. Is there a penalty for delayed GST payment?

Yes. there is an interest rate of 18% required to be paid by the dealer if the GST is unpaid, partially paid or paid late.

On top of that, a penalty fee has to be paid. The penalty amount is higher of Rs. 10,000 or 10% of the short paid or unpaid tax.

Refunds

A. What Is a GST refund?

When the GST is paid more than the GST liability, a dealer can claim a GST refund. The process of claiming a GST payment is online & there are time limits set to avoid confusion. 

B. When can be the GST refunds claimed?

There are several cases when a dealer can claim a GST refund, some of them are listed below -  

  • Excess GST paid due to mistake
  • Export of Goods or Services
  • Supplies to SEZ units and developers
  • Deemed Exports
  • Refund of pre-deposit
  • Refund of accumulated Input Tax Credit on account of inverted duty structure
  • Refund of taxes on purchase made by the UN or embassies etc.
  • Refund to International Tourists of GST paid on goods in India and carried abroad at the time of their departure from India.

C. How to calculate GST refund?

Let's take a small example of a refund that can be claimed in the case of excess tax payment made.

Ghanshyam's GST liability for the month of September is Rs 25000. But due to some mistake, he made the GST payment of Rs 2,50,000.

Since Ghanshyam made an excess GST payment of Rs 2,25,000 he can claim the refund of the same.

D. What is the time limit for claiming the refund?

The time limit for claiming the refund is 2 years from the relevant date. However, the relevant dates vary according to cases.

Listed below are some of the relevant dates: 

  • In the case of excess payment of GST the relevant date is the date of payment.
  • In the case of export or deemed export of goods or services, the relevant date is the date of dispatch/loading.
  • In the case Income Tax Credit(ITC) accumulates as the output is tax exempted or nil-rated, the relevant date is the last date of the financial year to which the credit belongs.
  • In the case of finalisation of provisional assessment, the relevant date will be the one on which the tax is adjusted.

E. How to claim GST refund?

The entire GST refund claim and processing is done online on the GST Portal. The refund application has to be made in Form RFD 01 within 2 years from relevant date. The application should also be certified by a practicing Chartered Accountant. 

"File your GST return automatically with Giddh & get refunds faster." 

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