One of the benefits under GST regime is that the payment of taxes is done online. To make GST payment process convenient, each registered taxpayer gets Electronic credit Ledger and two electronic ledgers. These ledgers include:
- Electronic Cash Ledger
- Electronic Credit ledger
The electronic cash ledger reflects the cash available to settle the tax liability. Whereas, the Electronic liability ledger showcases the amount of tax payable by the taxpayer. Finally, the electronic credit ledger displays the input tax credit balance available to the registered taxpayer.
So, let’s first understand how the ledger works in GST payment process before understanding what is electronic credit ledger.
GST Payment Process in Brief
The taxpayer raises a challan in form GST PMT – 06 to begin with the GST payment. This challan contains the details of the amount to be deposited towards tax, interest, penalty, fees or any other amount. And it is valid for a period of 15 days.
Thus, the taxpayer deposits the tax amount at the common portal after generating the Challan. Once this is done, the collecting bank generates the CIN (Challan Identification Number). This number is indicated on the GST Payment Receipt. Hence, the amount so deposited is credited to the electronic cash ledger of the taxpayer on whose behalf the payment was deposited. This happens only on receipt of the CIN.
Now, the payment of tax takes place as under:
- Both CGST and SGST are paid in equal proportions for intra – state supplies
- IGST is paid for inter – state supplies
The taxpayer’s monthly GST return reflects the amount of tax to be paid as well as the input tax credit (ITC) details. These ITC details are self assessed by the taxpayer via monthly returns. Furthermore, these details get reflected in the electronic credit ledger. And the amount of ITC in the electronic credit ledger gets utilized as per the rules mentioned in section 49.
Therefore, ITC is utilized in the following sequence to set off the CGST liability:
- ITC standing under CGST is used to set off CGST output liability
- Then, ITC standing under IGST is used to set off the remaining CGST output liability
Further, ITC is utilized in the following sequence to set off the SGST liability:
- ITC standing under SGST is used to set off SGST output liability
- Then, ITC standing under IGST is used to set off the remaining SGST output liability
Finally, ITC is utilized in the following sequence to set off the IGST liability:
- ITC standing under IGST is used to set off IGST output liability
- ITC standing under CGST is used to set off the remaining IGST output liability
- Finally, ITC standing under SGST is used to set off the remaining IGST output liability
Furthermore, no set off is available between CGST and SGST.
Hence, from the above GST payment process it is clear how electronic credit ledger is used while making tax payment. Let’s now understand what is electronic credit ledger in detail.
What is Electronic Credit Ledger in GST?
The electronic credit ledger reflects the amount of Input Tax Credit available to the taxpayer. Thus, every claim of input tax credit of the registered taxpayer eligible for claiming such a credit is credited to this ledger. The amount available in the electronic credit ledger is utilized in making payments towards outward tax liability by the registered taxpayer.
Form GST PMT-02
The electronic credit ledger shall be maintained in form GST PMT – 02. This form shall be maintained on the common portal for every registered person eligible to claim input tax credit under GST act. Every claim of the input tax credit is credited to the electronic credit ledger.
Hence, following are the components of Form GST PMT-02:
- Serial Number
- Date of Deposit
- Time of Deposit
- Reporting Date by Bank (Reference Number)
- Reference Number
- Tax period, if applicable
- Transaction Type (Debit/Credit)
- Amount Debited/Credited
- Integrated Tax
- Central Tax (CGST)
- State Tax (SGST)
- Integrated Tax
- Central Tax
- State Tax
GST Payment Rules for Electronic Credit Ledger
- The electronic credit ledger shall be maintained in form GST PMT – 02 on the common portal. This ledger reflects the amounts credited against every claim of input tax credit taken under the act.
- This ledger is debited to an extent the liability is set off or discharged using the credit available.
- There are cases where a registered taxpayer claims refund of any unutilized amount of input tax credit from the electronic credit ledger. In such cases, the electronic credit ledger is debited to the extent of the refund claimed.
- However, there are situations when such refund filed by the taxpayer is rejected either fully or partially. In such a case, the amount debited in rule above is credited to the electronic credit ledger of the concerned taxpayer. The amount credited is restricted to the portion of the claim rejected. Furthermore, the said amount is credited by a proper officer through an order in form GST PMT – 03.
- Entries are not allowed to be made directly in the electronic credit ledger under any circumstance apart from the rules mentioned above.
- In case there is any discrepancy in the electronic credit ledger, the registered person communicates it to the concerned officer. This communication is made through the common portal in form GST PMT – 04.