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GST Payments and Refunds

Updated on :  

08 min read

Current GST return filing requires that every month, once GSTR-1 is filed to report Sales, one must file GSTR-3B to report the ITC and make necessary GST Payment. Also if a refund is required to be claimed the same can be done by filing relevant refund related forms.

Latest Updates on GST Refund

1st May 2021
Where the time limit to pass orders for rejecting any refund claim fully or partly falls between 15th April 2021 and 30th May 2021, it is extended. The extended time limit shall be later of two dates:
(1) 15 days after reply to notice OR
(2) 31st May 2021

A. Payments

What are payments to be made under GST?

Under GST the tax to be paid is mainly divided into 3 –

  • IGST – To be paid when interstate supply is made (paid to center)
  • CGST – To be paid when making supply within the state (paid to center)
  • SGST – To be paid when making supply within the state (paid to state)
Goods sold from Delhi to BombayNONOYES
Goods sold within BombayYESYESNO
Goods sold from Bombay to PuneYESYESNO

Apart from the above payments a dealer is required to make these payments –

  • Tax Deducted at Source (TDS) – TDS is a mechanism by which tax is deducted by the dealer before making the payment to the supplier

For example – A government agency gives a road laying contract to a builder. The contract value is Rs 10 lakh. When the government agency makes payment to the builder TDS @ 1% (which amounts to Rs 10,000) will be deducted and balance amount will be paid.

  • Tax Collected at Source (TCS) – TCS is mainly for e-commerce aggregators. It means that any dealer selling through e-commerce will receive payment after deduction of TCS @ 2%.

This provision is currently relaxed and will not be applicable to notified by the government.

  • Reverse Charge – The liability of payment of tax shifts from the supplier of goods and services to the receiver. To know more about reverse charge check out our article Know all about Reverse Charge under GST
  • Interest, Penalty, Fees and other payments

How to calculate the GST payment to be made?

Usually, the Input Tax Credit should be reduced from Outward Tax Liability to calculate the total GST payment to be made.

TDS/TCS will be reduced from the total GST to arrive at the net payable figure. Interest & late fees (if any) will be added to arrive at the final amount.


Also, ITC cannot be claimed on interest and late fees. Both Interest and late fees are required to be paid in cash. The way the calculation is to be done is different for different types of dealers –

Regular Dealer A regular dealer is liable to pay GST on the outward supplies made and can also claim Input Tax Credit (ITC) on the purchases made by him. The GST payable by a regular dealer is the difference between the outward tax liability and the ITC.
Composition Dealer The GST payment for a composition dealer is comparatively simpler. A dealer who has opted for composition scheme has to pay a fixed percentage of GST on the total outward supplies made. GST is to be paid based on the type of business of a composition dealer.

Who should make the payment?

These dealers are required to make GST payment –

  1. A Registered dealer is required to make GST payment if GST liability exists.
  2. Registered dealer required to pay tax under Reverse Charge Mechanism(RCM).
  3. E-commerce operator is required to collect and pay TCS
  4. Dealers required deducting TDS

When should GST payment be made?

GST payment is to be made when the GSTR 3 is filed i.e by 20th of the next month.

What are the electronic ledgers?

GST Payments and Refunds

These ledgers are maintained on the electronically on GST Portal.  

How to make GST payment?

GST payment can be made in 2 ways

Payment through Credit  Ledger

The credit of ITC can be taken by dealers for GST payment. The credit can be taken only for payment of Tax. Interest, penalty and late fees cannot be paid by utilizing ITC.

Payment through Cash Ledger

GST payment can be made online or offline. The challan has to be generated on GST Portal for both online and offline GST payment. Where tax liability is more than Rs 10,000, it is mandatory to pay taxes Online.

What is the penalty for non-payment or delayed payment?

If GST is short paid, unpaid or paid late interest at a rate of 18% is required to be paid by the dealer. Also, a penalty to be paid. The penalty is higher of Rs. 10,000 or 10% of the tax short paid or unpaid.

B. Refunds

What is GST refund?

Usually when the GST paid is more than the GST liability a situation of claiming GST refund arises. Under GST the process of claiming a refund is standardized to avoid confusion. The process is online and time limits have also been set for the same.

When can the refund be claimed?

There are many cases where refund can be claimed. Here are some of them – Excess payment of tax is made due to mistake or omission.

  • Dealer Exports (including deemed export) goods/services under claim of rebate or Refund
  • ITC accumulation due to output being tax exempt or nil-rated
  • Refund of tax paid on purchases made by Embassies or UN bodies
  • Tax Refund for International Tourists
  • Finalization of provisional assessment

How to calculate GST refund?

Let’s take a simple case of excess tax payment made. Mr. B’s GST liability for the month of September is Rs 50000. But due to mistake, Mr. B made a GST payment of Rs 5 lakh. Now Mr. B has made an excess GST payment of Rs 4.5 lakh which can be claimed as a refund by him. The time limit for claiming the refund is 2 years from the date of payment.

What is the time limit for claiming the refund?

The time limit for claiming a refund is 2 years from relevant date. The relevant date is different in every case. Here are the relevant dates for some cases –

Reason for claiming GST RefundRelevant Date
Excess payment of GSTDate of payment
Export or deemed export of goods or servicesDate of despatch/loading/passing the frontier
ITC accumulates as output is tax exempt or nil-ratedLast date of financial year to which the credit belongs
Finalisation of provisional assessmentDate on which tax is adjusted

Also if refund is paid with delay an interest of 24% p.a. is payable by the government.

How to claim GST refund?

The refund application has to be made in Form RFD 01 within 2 years from relevant date. The form should also be certified by a Chartered Accountant. You can file your returns very easily using ClearTax GST Software.

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  2. GST Payment issues may arise for a taxpayer on several instances. GST Portal provides an option to raise a complaint or grievance with GSTN in form PMT-07.
  3. PMT-03 is issued by GST authority after an undertaking from the taxpayer. The electronic cash or credit ledger gets debited for the GST refund amount.
  4. Duty free shops can apply for GST refund of the ITC accumulated on their purchases. CBIC has notified detailed procedure for the same. Read to know more.
  5. Know all about merchant exports, including the procedure to be followed, conditions for availing the concessional rate and refund process.
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  10. The taxpayers who filed returns under GST are getting notices regarding late payment of tax and claiming ineligible ITC. Know how to reply to these notices.
  11. Supply made to an SEZ unit/developer is called a zero-rated supply and eligible for a refund of the tax paid or ITC accumulated. Know the steps.
  12. The taxpayer can claim accumulated ITC due to the inverted tax structure. Here is the guide explaining step by step on how to file GST RFD-01.
  13. GST Refund Status Online - After filing a GST refund application, here's how you can track the refund status pre and post-login to the GST account and update the bank account details.
  14. Form PMT-09 has been introduced to shift wrongly paid taxes. If a taxpayer has paid tax under the wrong head, he can now rectify the same using Form PMT-09.
  15. Have you paid your GST dues and now want to track GST payment status online? Click here for a step-by-step guide along with certain common GST payment failures.
  16. Here is a step by step guide to view your electronic cash ledger (ledger that contains deposits that a taxpayer has made) on the GST portal or GST website
  17. Payment voucher has to be issued by the receiver of goods and services at the time of making the payment to the supplier under reverse charge.
  18. refund voucher is to be issued in the case of withdrawal of service or sale of goods by the supplier or service provider under GST.
  19. Know more about when RFD-04 is issued and What does it mean by the term Provisional Refund...
  20. Refund Forms to be submitted in case of rejection or adjustment of refund are clarified in this article. The exporter has to file GST RFD-11.
  21. The acknowledgment for the refund claimed appears in the form GST RFD-02. This article details the nuances of this acknowledgement section.
  22. Clarification on Statements to be Annexed with the application for refund There are 7 different statements depending on the reason for claiming the refund.
  23. Clarification on the format of Form GST RFD-01 is crucial as it covers the format of application for the refund under GST.
  24. PMT-06 is the payment challan popularly used for most of the GST payments by regular taxpayers. It gained significance with the QRMP scheme.
  25. This article deals with the format of Form GST PMT-05 containing the electronic cash ledger. Details of tax payment through net banking are available here.
  26. Clarification on Format of Form GST PMT-02 is provided in this article. Form GST PMT-02 contains details of input tax credit available and utilized.
  27. Clarification on format of form GST PMT-01 and the particulars regarding the payment of tax, interest etc mentioned under the electronic liability register.
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  29. Check out the forms GST RFD-01, RFD-02, RFD-03 to be filed for claiming of refund, acknowledgment, and examination under GST.
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  33. Check out four basic questions which can explain the basic application of TDS as provided under GST law. Know about TCS compliance for e-commerce sector.
  34. Find out about E-ledgers under GST which will help taxpayers know the status of input credit available, tax liability etc.
  35. Check out the payment process under GST which is completely online process and how the Tax liability would be calculated under IGST, CGST, SGST separately.
  36. GST calculator is a handy ready-to-use online calculator to compute the GST payable for a month or quarter. The simplified GST calculator helps you determine the gross or net product price on percentage-based GST rates.
  37. Find out what is Revenue neutral rate(RNR). Know about ratio for distribution of RNR, calculation of RNR and the tax structure.
  38. Find out why every registered taxable person under GST law is required to maintain electronic credit ledger and electronic cash ledger on GST common portal.
  39. GST payment can be made easily on the GST portal following this comprehensive guide. The tax payments can be done using online or offline modes.
  40. TDS needs to be deducted at rate of 1% on value of supply where the supply value under a contract exceeds Rs. 5lakh under GST. The tax is to be deducted by specified persons/entities as notified by the government.
  41. Refund process under GST will be a much faster aand smoother process. It is expected that processing time for refund under GST might be 7 days.