GST payment: set-off order, interest and late fee
How GST is paid through the cash and credit ledgers, the order of using ITC, interest at 18%, late fees and the 3-year filing bar.
Key facts
- GST is paid through three ledgers: electronic cash ledger (money you deposit with PMT-06), electronic credit ledger (your ITC) and electronic liability ledger (what you owe).
- ITC must be used in a fixed order (sections 49 and 49A):
| ITC of | Use first for | Then for |
|---|---|---|
| IGST | IGST | CGST and SGST, in any order |
| CGST | CGST | IGST |
| SGST/UTGST | SGST/UTGST | IGST |
CGST credit can never pay SGST, and SGST credit can never pay CGST. Use IGST credit fully before using CGST or SGST credit.
Rule 86B: 1% in cash
If taxable supplies in a month exceed ₹50 lakh, at least 1% of output tax must be paid in cash. It does not apply if you or your partners/directors paid more than ₹1 lakh income tax in each of the last two years, you got a refund above ₹1 lakh for exports or inverted duty in the previous year, or you have already paid more than 1% of output tax in cash in the year so far.
Interest (section 50)
- 18% a year on the tax paid late in cash, from the day after the due date until payment.
- On ITC wrongly availed and utilised: interest at 18% from the date of utilisation. ITC wrongly availed but not used (balance maintained in the credit ledger) attracts no interest.
Late fee for GSTR-3B and GSTR-1
| Return | Late fee per day (CGST + SGST) | Maximum |
|---|---|---|
| With tax liability | ₹50 | ₹2,000 (turnover up to ₹1.5 crore) to ₹10,000 (above ₹5 crore) |
| Nil return | ₹20 | ₹500 |
| GSTR-9, turnover up to ₹5 crore | ₹50 | 0.04% of turnover in the state |
| GSTR-9, turnover ₹5–20 crore | ₹100 | 0.04% of turnover in the state |
| GSTR-9, turnover above ₹20 crore | ₹200 | 0.5% of turnover in the state |
3-year bar
A return (GSTR-1, GSTR-3B, GSTR-4, GSTR-9 and others) cannot be filed after 3 years from its due date. File old pending returns before they get locked.
Common questions
Can I pay GST in instalments?
Yes, after a demand order you can apply for up to 24 monthly instalments (section 80). For regular returns, the full tax is due by the 3B due date.
Is interest payable on the gross tax or net cash?
On the net tax paid in cash (after ITC), for returns filed late, except where tax is found payable in an audit or demand.
My cash ledger has a balance under CGST but I owe SGST. Can I use it?
Not directly. File PMT-09 to transfer the balance from the CGST head to the SGST head within the cash ledger.
Sources
- Central Goods and Services Tax Act, 2017 (as amended)
- Central Goods and Services Tax Rules, 2017
- Notification 19/2021-CT: late fee caps for GSTR-3B
- Notification 14/2022-CT: interest on ITC wrongly availed and utilised
- Notification 9/2022-CT: section 50(3) amendment in force
- GSTN advisory: returns barred after 3 years from due date