GST Payment Process and Rules – All you need to Know

GST, or Goods and Services Tax, replaced several other indirect taxes levied on products and services back in July 2017. Since its implementation, all business owners, self-employed individuals or professionals involved in the purchase or sale of goods and services have been required to make GST payment, and file returns mandatorily. The payment has to be made as per the return filing timeline.

Business owners are also required to complete their GST registration and obtain their unique 15-digit alphanumeric code known as the GST Identification Number while making payment.

However, being a relatively new process, most Indian businesses are going through the learning curve of what is GST. They must, therefore, have a clear idea of the payment process for GST and make sure that they do not miss any deadlines to avoid interest payment or any default.

GST payment – An overview

Every registered business that has obtained GSTIN is required to pay GST as per the calculated tax liability. The payment is to be made every month, and you need to follow certain steps to file your GST return online or offline on the 20th of every month.

The calculation of tax liability is performed taking into consideration the ITC (Input Tax Credit) for each month, which is to be set off against the Outward Tax liability. Any balance remaining after this settlement is the GST amount you are required to pay. Along with the payment process, you must also learn how to file GST return as you are required to submit it against every payment made.

The payment process for GST

Tax liability of an individual is calculated as per the applicable GST rates in India. Once calculated, proceed with the following steps to make GST payment online or offline.

  1. Log in to your account on the GST portal with your GSTIN and password.
  2. Under the ‘Services’ tab, select the payments option.
  3. From the dropdown menu on payments, select ‘Create Challan’.
  4. Enter the amounts under different heads given in the challan and choose your method of payment.
  5. Once you have cross-checked all the amounts entered, proceed to create challan. Save the challan for any future changes.
  6. Once generated, you are required to make GST payment as per the calculated tax liability. You can do so online through NEFT/RTGS, net banking, debit card, or any other payment method. If you opt to pay the same offline, download the challan and make over-the-counter payment to a nearby financial institution.
  7. After successful payment, you will receive an acknowledgement through which you can generate a payment receipt of final challan.

You must keep a copy of GST payment receipt for any future reference.

Rules regarding the payment of GST –

Once you register for GST online, you are required to maintain three ledgers for the account on the GST portal. These are the following –

  • Ledger for electronic tax liability
  • Electronic cash ledger
  • Electronic credit ledger

Also, the payments required to be made include –

  • CGST – Applicable for intra-state transactions and paid to the centre.
  • SGST – Applicable for intra-state transactions and paid to the state.
  • IGST – Applicable for inter-state transactions and paid to the centre.

People who are required to pay tax under the GST regime include –

  1. Registered dealers.
  2. Registered dealers liable to reverse charge mechanism.
  3. TCS to be paid by e-commerce operators.
  4. TDS to be deducted by dealers wherever applicable.

Timely payment of this tax also allows you to enjoy other benefits and advantages of GST. GST returns are also an important document that is required while availing credits like business loans, helping to infuse necessary finance into an organisation when needed.

Following the above-mentioned rules when calculating your tax liability allows an individual to make GST payment according to their tax bracket. The payment schedule for GST is of critical importance, and timely payment ensures hassle-free business operations throughout the year.

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