GST or Goods and Services Tax is a comprehensive, multistage, destination-based tax that provides revenue to the government of India. With the introduction of GST, all other taxes have been subsumed, except a few state taxes.
Under this tax regime, tax is levied at every stage of the sale. The GST council has made the entire process of GST an easy-going online process, right from registration to filing of the same. This article will guide you through the entire process of making payments and the main features.
Introduction of GST has initiated the removal of bundled indirect taxes such as VAT, CAD, SAD, CST, Service tax and Excise. It has simplified the tax policies in India by reducing compliance on tax as well as eradicating the cascading effects of taxes, that is, removal of tax on tax.
Payments to be made under the GST System
Under the GST system, for any intra-state supplies, CGST (Central Goods and Services Tax) is paid that goes directly to the government while SGST (State Goods and Services Tax) goes to the respective state. There is another element called IGST (Integrated Goods and Services Tax) that is paid for any inter-state supply and includes both SGST and CGST elements.
Who is liable to pay GST?
GST should be paid by any person who is a supplier of goods or services or both. However, according to the reverse charge mechanism, in specific cases like import and additional prescribed supplies, the GST liability falls on the recipient.
When does the liability to pay GST occur?
Right at the time of supply of the goods or services or both, the liability to pay GST takes place.
However, the payment needs to be made in the event of any of these three occurring earlier:
-Receipt of payment
-Issue of invoice
-End of supply
What are the main features of the GST payment process?
Coming to the salient features of the GST payment process, they are as follows:
- The payment process has been simplified for taxpayers by providing anytime, anywhere, and hassle-free mode of tax payment.
- In every mode of payment, an electronically generated challan is issued from the common portal GSTN. There are no manually arranged challans to be processed.
- Electronic format is used for a logical tax collection data.
- The online payment system makes the entire process of making payment very easy and simple.
- Paperwork has been eradicated completely
- It initiates quicker tax payment to the government
- Accounting and reporting is carried out immediately in this process
- Digital challans are store-housed
- The entire procedure is extremely easy-going for banks too
- All receipts are electronically settled
How to make a GST payment?
GST payment can be made in the following ways:
- The tax amount can be paid through the Debit of Credit Ledger of the taxpayer mentioned on the common portal; it should be noted that through the debit of Credit Ledger, only the tax amount can be paid. Interest, penalty or fees cannot be paid through this mode. However, the input tax credit on account of CGST cannot be used towards the payment of SGST and vice versa.
- GST can even be paid in cash by debit in the cash ledger of the taxpayer maintained on the common portal. There are various modes of depositing cash in the cash ledger like e-payment through debit/credit card, internet banking, NEFT, RTGS, or over-the-counter payment in authorized branches of specific banks.
When is the GST payment supposed to be made by the supplier?
A normal taxpayer is supposed to make the tax payment against GST every month, latest by the 20th of the following month. For the execution of the payment, cash is first put into the cash ledger, which in turn is debited by the taxpayer in the ledger in the monthly returns record. This is done by showing the debit entry number in the return.
Even to know the GST application status, one does not have to run from pillar to post and can view everything online on the GST portal by simply punching in the ARN received on submission of the GST registration form.
To sum it up all, GST has rightly earned the slogan of ‘One Nation, One Tax, One Market,’ for itself by the Central Government of India.