GST Payments and Appeals
GST payments and appeals refer to the regular settlement of a firm’s outstanding Goods and Services Tax (GST) amount. Complying with GST requirements is crucial for companies, as it ensures adherence to tax regulations. The implementation of the GST regime by the Indian government in 2017 aimed to enhance transparency and standardize the tax system.
As per tax regulations, authorized standard taxpayers are obligated to pay GST by the 20th of each month. This can be accomplished by filing the GSTR-3B form, which also facilitates reporting of the company’s Income Tax Credit (ITC). Additionally, the current GST return filing procedure involves submitting the GSTR-1 form on a monthly basis to report sales. Tax returns can be claimed by completing the Income Tax Return (ITR) application form.
Payments to be Made Under GST
As a taxpayer, it is essential to have a good understanding of the various types of GST payments that need to be made under the GST regime. Here are the details regarding these payments.
- IGST, also known as Integrated Goods and Services Tax, is levied by the central government when goods and services are transferred between different states.
- CGST, which stands for Central Goods and Services Tax, encompasses the taxes that were formerly imposed as central indirect taxes. It is levied by the central government on the intra-state movement of goods and services within a particular state.
- SGST, also known as State Goods and Services Tax, is a type of tax imposed by the state government on intra-state supplies of goods and services. It is collected when goods or services are sold or consumed within the boundaries of a particular state.
Calculating GST Payments and Appeals
To begin with, it is important to determine the HSN (Harmonised System of Nomenclature) or SAC (Services Accounting Code) code for the products or services being taxed. This code helps in identifying the applicable GST rate.
GST on services is charged at five different slabs: 0%, 5%, 12%, 18%, and 28%. By knowing the appropriate HSN or SAC code, you can determine the specific percentage of GST to be levied.
Here is a step-by-step guide to help you calculate your GST payments and appeals:
- To calculate the aggregate GST payments and appeals owed by a company to the appropriate governmental entities, the Input Tax Credit (ITC) should be deducted from the external tax liabilities. This helps to determine the net GST amount that needs to be paid. The ITC is the credit that a business can claim for the GST paid on its purchases or expenses, which can be utilized to offset the GST liability. Subtracting the ITC from the tax obligations provides an accurate assessment of the GST payments that need to be made.
- To calculate the net amount that the business owes, it is necessary to subtract the Tax Deducted at Source (TDS) from the Tax Collected at Source (TCS). TDS refers to the tax amount that has been deducted by the recipient while making payments to the business, whereas TCS represents the tax amount collected by the seller while receiving payment from the buyer. By subtracting TDS from TCS, the net amount payable by the business can be determined after considering the tax deductions and collections made on its behalf.
- As the final step, any applicable interest and late fines will be added to the calculated amount to arrive at the final value. If there are delays or non-compliance in making GST payments, the relevant authorities may impose interest charges or penalties. These additional amounts need to be added to the calculated value to determine the final GST payment owed by the business. It is important to adhere to the prescribed timelines and fulfill the GST obligations to avoid any potential interest or penalty charges.
Who Needs to Make GST Payments?
- GST registered dealers must pay GST if they have any tax liability. Compliance with GST payment requirements is essential to avoid penalties.
- Registered dealers must also comply with the tax payment obligations under the Reverse Charge Mechanism (RCM). RCM requires the recipient of goods or services to pay the applicable GST directly to the government instead of the supplier. It is the responsibility of registered dealers to understand and fulfill their tax payment obligations under RCM to maintain compliance with the GST regulations.
- Operators, aggregators, and merchants operating in the e-commerce sector have an additional tax obligation known as Tax Collection at Source (TCS). They are required to collect and remit GST on certain transactions conducted through their platforms. TCS is collected from the buyers at the time of payment and is then paid to the government. E-commerce entities need to ensure compliance with the TCS provisions and accurately collect and remit the required GST amount to the authorities.
- Dealers are required to deduct Tax Deducted at Source (TDS) when it is deemed appropriate. TDS is applicable in certain cases where specified payments are made, such as rent, commission, professional fees, etc. The dealer is responsible for deducting the prescribed TDS amount from the payment made to the recipient and remitting it to the government within the stipulated time. It is crucial for dealers to comply with TDS provisions and fulfill their obligations to ensure proper tax compliance.
Options of Making GST Payments and Appeals
- Dealers have the option to utilize the promptly acquired Input Tax Credit (ITC) to make payments towards GST. However, it is important to note that ITC cannot be utilized for settling interest, penalties, or outstanding late fees. The ITC credit can be redeemed towards the payment of GST liabilities, helping businesses offset their tax obligations. It is crucial to ensure that the ITC is utilized appropriately and in accordance with the prescribed guidelines and restrictions set by the tax authorities.
- You have the flexibility to make GST payments using either the cash ledger. The payment can be done through online or offline modes. In both cases, it is necessary to generate a GST payment challan on the GST Portal. However, it is important to note that if the tax amount exceeds ₹10,000, dealers are mandated to make the GST payment online. This requirement ensures efficient and secure payment processing, promoting digital transactions in line with the government’s efforts to enhance transparency and streamline the tax system.
What is a GST Refund?
Under the GST refund process, registered taxpayers have the opportunity to claim a refund for any excess amount paid if it exceeds their GST obligations. To initiate the refund claim, taxpayers need to file a refund application on the GST portal, providing all the necessary information as per the requirements. The refund application should include details such as the amount to be claimed, supporting documents, and any other relevant information requested by the authorities. Following the submission of the refund application, the tax authorities will process and verify the claim before approving the refund, ensuring compliance and adherence to the refund provisions under GST.
When Can You Claim GST Refund?
You can claim GST refunds in various situations, including:
- Overpayment of taxes due to errors or mistakes in tax calculations.
- Accumulation of Input Tax Credit (ITC) resulting from the production of tax-free or nil-rated goods or services.
- Exporters, including those involved in deemed exports, can claim refunds on taxes paid for the purpose of providing goods or services for export, subject to certain conditions.
- VAT refunds on purchases made by embassies or organizations affiliated with the United Nations (UN).
- Tax refund provisions for foreign visitors who are eligible for tax refunds on purchases made during their stay in the country.
- Completion of preliminary certifications or clearances that entitle the taxpayer to claim a refund on taxes paid.
