Payment of Tax
AI-assisted · review in progress · last updated 25 July 2026 · jump to quick revision
In 30 seconds
- Payment machinery lives in Chapter X of the CGST Act (Sections 49–53A) and Rules 85–88D; Section 20 of the IGST Act applies it all to IGST mutatis mutandis.
- Three portal ledgers: the cash ledger pays ANY amount, the credit ledger pays ONLY output tax, and the liability register records every liability.
- Set-off order: IGST credit first and fully (Section 49A), then CGST/SGST in any order and proportion — CGST and SGST credit never cross.
- Interest — '18 Late, 24 Cheat': 18% for belated tax payment (Sec 50(1)); 24% only when ITC is wrongly availed AND utilised (Sec 50(3)).
- Challan mechanics: single challan PMT-06 valid 15 days, CPIN (14-digit) vs CIN (17-digit), OTC cash capped at ₹10,000 per challan per tax period.
Based on GST law as on 30.04.2025 (May 2026 exams onwards). Section numbers are CGST Act unless stated.
How the chapter fits together
Payment of tax is pure machinery: Chapter X of the CGST Act (Sections 49–53A) read with Chapter IX of the CGST Rules (Rules 85–88D). Section 20 of the IGST Act applies these payment provisions to IGST mutatis mutandis. Everything happens across three portal-based e-ledgers, and every question in this chapter reduces to one flow:
- Deposit money → Electronic Cash Ledger [49(1), Rule 87] — can pay any amount →
- Self-assessed ITC per Section 41 → Electronic Credit Ledger [49(2), Rule 86] — pays only output tax →
- All liabilities recorded in the Electronic Liability Register [49(7), Rule 85] →
- Set off credit in the 49(5)/49A/49B + Rule 88A order →
- Discharge dues in the 49(8) sequence → pay Section 50 interest if late or if ITC was wrongly availed and utilised.
Three source mnemonics carry the whole chapter: “IGST FIRST — FULLY” (Sec 49A), “C-S No Marriage” (CGST ⇎ SGST/UTGST, never), and “18 Late, 24 Cheat” (the two interest rates).
The three e-ledgers
| Ledger | Provisions | Updated by | Pays / records |
|---|---|---|---|
| Electronic Cash Ledger | S.49(1)/(3)/(6)/(10)/(11), R.87 | Taxpayer (deposits) | ANY payment — tax, interest, penalty, fee, other |
| Electronic Credit Ledger | S.49(2)/(4)/(5), 49A, 49B, R.86/86A/86B/88A | Taxpayer (self-assessed ITC) | ONLY output tax under the CGST/IGST Act |
| Electronic Liability Register | S.49(7)/(8)/(9), R.85 | Returns / officer | Records ALL liabilities |
Electronic Cash Ledger [Sec 2(43), 49(1)]
Ledger of cash deposits on the common portal. Usable for any payment — tax, interest, penalty, fee or any other amount.
Electronic Credit Ledger [Sec 2(46), 49(2)]
Self-assessed ITC as per Section 41 is credited here. Usable only for output tax — never for interest, penalty, fee or reverse-charge tax (Circular 172/04/2022).
Electronic Liability Register [Sec 49(7), Rule 85]
Records all liabilities of the taxable person. Unlike the two ledgers it is not defined in the Act, and it is updated through returns or by the officer — not by the taxpayer.
Output tax [Sec 2(82)]
Tax chargeable on taxable supplies made by a person or his agent — but it excludes tax payable under reverse charge. That exclusion is exactly why ITC can never pay RCM tax.
Valid return [Sec 2(117)]
A return furnished under Section 39(1) on which the self-assessed tax has been paid in full. Filed-but-unpaid is not a valid return.
Two riders on the cash ledger: any balance is refundable under Section 54 [49(6)], and Section 49(9) raises a rebuttable presumption that the tax incidence has been passed on to the recipient unless the contrary is proved (unjust enrichment).
Order of utilisation and discharge of dues
| Credit of | Use first for | Then | Never for |
|---|---|---|---|
| IGST | IGST | CGST and SGST/UTGST — any order, any proportion (Rule 88A) | — |
| CGST | CGST | IGST | SGST/UTGST |
| SGST/UTGST | SGST/UTGST | IGST — only if CGST balance is not available for IGST | CGST |
- Section 49A (notwithstanding Sec 49): CGST/SGST/UTGST credit is usable only after IGST credit is fully exhausted — “IGST FIRST — FULLY”.
- Absolute bar [49(5)(e) & (f)]: CGST ⇎ SGST/UTGST — never cross-utilisable, overrides everything.
- Section 49B: Government may prescribe the utilisation order on Council recommendation, but always subject to the 49(5)(e)/(f) bar; Rule 88A operationalises it.
- Section 49(12): Government may cap the proportion of liability dischargeable through the credit ledger — the enabling power behind Rule 86B (99% cap where taxable turnover exceeds ₹50 lakh/month, exclusive of exempt and zero-rated — automatic, no fraud needed). Rule 86A is the officer-driven block of fraudulent/ineligible ITC with reasons in writing. Both are detailed in Chapter 8.
- Order of discharge [49(8)] — “POD”, chronological and mandatory: Previous period dues → current period (Own) dues → Demand under Sections 73/74/74A.
One practical bar: the GST portal has no part-payment facility — a period’s tax must be paid in full (ITC plus cash) to file the return.
Deposits, challans and cash-ledger transfers
Deposits reach the cash ledger via net banking, UPI, cards, NEFT/RTGS or over-the-counter (OTC) payment [49(1), Rule 87]. There are no manual challans — a single challan (PMT-06) covers tax, interest, penalty and fee, and is valid for 15 days from generation; the mandate form for NEFT/RTGS/IMPS is also valid 15 days. Online payment after 8 pm is credited the same day.
OTC limit: ₹10,000 per challan per tax period. The limit does not apply to:
- Government departments and Commissioner-notified persons.
- Proper/authorised officers recovering dues — including amounts from attachment or sale.
- Proper/authorised officers depositing amounts under investigation, enforcement or as ad hoc deposit.
| Identifier | What it is | Trap |
|---|---|---|
| CPIN | 14-digit number generated on challan creation | Valid 15 days |
| CIN | 17-digit = CPIN + 3-digit bank code, on successful payment realisation | Don’t confuse with CPIN |
| BRN | Bank’s transaction reference number | — |
| E-FPB | Bank branch collecting GST — one per bank for PAN-India | RBI acts as E-FPB for NEFT/RTGS/IMPS |
The legal date of deposit is the date of credit to the Government account (the ledger debit date) — not the cheque or payment date.
PMT-09 transfers [49(10)]: cash-ledger balance can move head-to-head within your own ledger (any minor/major head), or to the IGST/CGST cash ledger of a distinct person (same PAN, Sec 25(4)/(5)). Proviso: the distinct-person transfer is barred if any unpaid liability exists in the Electronic Liability Register — own-head transfers are unaffected. The transferred amount is deemed deposited under 49(1) [49(11)].
Inter-government settlement runs behind the scenes: Section 53 (CGST account reduced, equal amount transferred to IGST account), Section 18 IGST Act (IGST reduced and apportioned to the “appropriate State” for SGST), and Section 53A (Centre–State cash-ledger transfer matched by Government).
Interest — Section 50
Two rates, one mnemonic — “18 Late, 24 Cheat”:
- Section 50(1): belated payment of tax → interest at a rate not exceeding 18% p.a. (notified rate = 18% vide Notification 13/2017-CT), payable suo motu, running from the day succeeding the due date to the date of payment [50(2)].
- Section 50(1) proviso — net cash basis: if the return is filed late but before Section 73/74/74A proceedings commence, interest applies only to the portion paid through the cash ledger. File late after proceedings commence, and the gross basis applies.
- Section 50(3): ITC wrongly availed AND utilised → interest up to 24% p.a., from the date of utilisation to the date of reversal/payment [Rule 88B(3)]. Mere availment without utilisation attracts no interest.
| Default | Interest | Provision |
|---|---|---|
| Belated payment of tax | 18% p.a. (notified rate; statute says “not exceeding 18%”) | S.50(1) |
| Return filed late, before S.73/74/74A proceedings, tax paid from cash ledger | 18% on the net cash portion only | S.50(1) proviso, R.88B(1) |
| Return filed on time but tax unpaid/short-paid | 18% on gross liability (cash + credit) | S.50(1), proviso inapplicable |
| Return filed late after S.73/74/74A proceedings commence | 18% on gross liability | S.50(1) proviso exception |
| ITC wrongly availed and utilised | Up to 24% p.a. | S.50(3), R.88B(3) |
| ITC wrongly availed but not utilised | NIL | S.50(3) |
Rule 88B computes interest in three limbs: net cash (late return), gross (other 50(1) cases), and utilisation-date (wrong ITC). The date of utilisation (Rule 88B Explanation): the day the credit-ledger balance falls below the wrongly availed amount starts the 24% clock; where utilisation happens through a return, it is the earlier of the return’s due date or its actual filing date.
Circular 192/04/2023: for the Rule 88B(3) shortfall test, look at the combined credit-ledger balance (IGST + CGST + SGST) — not the IGST head alone — but exclude compensation cess credit, which is usable only for cess.
Key timelines
| Period | Event | Where |
|---|---|---|
| 15 days from generation | Challan (CPIN) validity | R.87 / PMT-06 |
| 15 days | Mandate form validity (NEFT/RTGS/IMPS) | R.87 |
| Day succeeding due date → date of payment | 18% interest period | S.50(1), 50(2) |
| Date of utilisation → reversal/payment | 24% interest period for wrong ITC | S.50(3), R.88B(3) |
| Same day | Credit of online payment made after 8 pm | — |
| ₹10,000 per challan per tax period | OTC deposit ceiling (with exceptions) | R.87 |
| Date of credit to Govt account | Legal date of deposit | R.87 |
- Paying interest, penalty, fee or RCM tax from the credit ledger — it pays only output tax; everything else needs the cash ledger (Circular 172/04/2022).
- Charging 24% on every ITC error — 24% needs wrongly availed AND utilised; availment alone attracts no interest.
- Applying the net-cash basis everywhere — it applies only when the return itself is filed late and before S.73/74/74A proceedings; an on-time return with unpaid tax, or a late return after proceedings commence, pays on gross.
- Mixing up CPIN and CIN — CPIN is 14-digit at challan generation (valid 15 days); CIN is 17-digit (CPIN + 3-digit bank code) on successful realisation.
- Treating the cheque or payment date as the date of deposit — the legal date is the date of credit to the Government account.
- Confusing the two cross-utilisation rules — CGST↔IGST is allowed (per the order); CGST↔SGST/UTGST is absolutely barred [49(5)(e)&(f)].
- Blurring 49(5) and 49A — 49(5) is the base order (including the C⇎S bar); 49A is the overriding mandate that IGST credit be fully exhausted first.
- Using PMT-09 to a distinct person while an unpaid liability sits in the Liability Register — barred; own-head transfers are unaffected.
Quick revision cards
Which ledger pays what?
Order of ITC set-off?
Order of discharge of dues [49(8)]?
The two interest rates?
When does net-cash-basis interest apply?
Date of utilisation of wrong ITC?
Can ITC pay reverse-charge tax?
CPIN vs CIN vs BRN?
OTC cash limit?
What does PMT-09 do?
Legal date of deposit?
Circular 192/04/2023 in one line?