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In a bid to provide relief to taxpayers with an aggregated turnover of less than Rs. 5 Crores, the Government of India has transitioned to the new simplified GST return system beginning 1st Jan 2021. Under the new GST return system, taxpayers with turnover of less than Rs. 5 Crores in FY 2019-20 have been automatically converted into quarterly filers from Jan 2021. The new GST return filing requires monthly or quarterly filing of GSTR-1 to report sales and GSTR-3B to report Input Tax Credit (ITC) and make necessary payments. For quarterly filing, the GSTR-1 is filed before the 13th of the month succeeding every quarter, and the GSTR-3B is filed before the 22nd or 24th day of the month succeeding the quarter.

I. GST Payments

What are GST Payments?

Under GST laws, there are three types of tax payments:

  • Central GST (CGST):

Tax paid to the central government for the movement of goods and services within the states.

  • State GST (SGST):

Taxes paid to the state government for the movement of goods and services within a state.

  • Inter-state GST (IGST):

Tax paid to the central government for inter-state movement of goods and services.

Besides these three types of GST payments, a dealer is required to make the following types of payments additionally:

  • TDS (Tax Deducted at Source):

It is a mechanism by which a dealer deducts the tax in advance before making the payment to the supplier.

  • TCS (Tax Collected at Source):

Currently a relaxed provision, it is mainly applicable for e-commerce aggregators and any e-commerce seller shall receive the payment after deduction of 2% TCS.

  • Reverse charge:

In this type of payment, the burden of paying tax shifts from the supplier of goods and services to the receiver.

How are GST Payments Calculated?

Calculation of GST payments is normally a three-step process. First, the ITC is deducted from the outward tax liability to derive the total GST amount. Next, the TDS/TCS is deducted from the total GST to arrive at a net payable figure. Lastly, any interest and late fees shall be clubbed to calculate the final figure.

GST payment calculation also varies according to the dealer type.

  • Regular dealer:

The GST payment made by a regular dealer is calculated by deducting the outward tax liability from the Input Tax Credit.

  • Composite dealer:

A dealer who preferred to go with a composite scheme is required to pay a fixed percentage of GST on the total outward supplies, depending on the type of business of the dealer.

How are GST Payments Made?

GST Payments can be done using electronic ledgers as mentioned below

  • Credit Ledger:

The credit on ITC can be used only for payment of taxes. Penalties and interest cannot be paid using the ITC.

  • Cash Ledger:

GST Payment through cash ledgers can be made via both online and offline modes using a challan generated from the GST portal. In cases where tax liability exceeds Rs. 10,000, it is necessary to pay taxes online.

  • Late Payments:

In case of delayed GST payments or unpaid GST, the dealer shall have to pay an interest of 18 percent along with a penalty of Rs. 10,000 or 10 percent of the tax unpaid, whichever is higher. 

II. GST Refunds

What is a GST Refund?

When the GST paid exceeds the GST liability, a GST refund claim situation arises. For instance, if you had a GST tax liability of Rs. 1,00,000 for May 2020 but you happened to pay Rs. 1,10,000 due to oversight. Now, the excess payment made is Rs. 10,000 that you could claim as a refund.

A standard procedure available online needs to be followed in claiming GST refunds, well within a prescribed timeframe. GST refunds can be claimed under the given cases:

  • When there is an unused Input Tax Credit.

  • On tax-free supplies in the event of manufacturing, production, and generation activities.

  • Export of goods and services.

  • Post finalization of provisional assessment.

  • On taxes paid by UN bodies, Para-military canteens, etc.

  • Refund of pre-deposit in case of an appeal.

  • For GST payment inadvertently made in excess.

What is the Deadline for Claiming GST Refunds?

GST refunds may be claimed within 2 years from the relevant date. The relevant date differs from situation to situation.


Relevant Date

Goods exported by post

Dispatch date of goods as sealed by the concerned Post Office

Goods exported by land

The date on which goods cross the border

Goods by air or sea cargo

The date on which the flight or ship with goods loaded left India

Services exported that received an advance payment before the date of issue of the invoice

Date of Issue of the invoice

Pre-deposit in case of an appeal

Date of communication of the decree, judgment, or court’s direction

Upon finalization of provisional assessment

Tax adjustment date after the final assessment

Unutilised ITC

Last day of the financial year in which claims for refund arises

How to Claim GST refunds?

The Form RFD 01 serves as an application to initiate the refund process by registered taxpayers under the GST. A duly filled Form RFD 01 needs to be authorized by a Chartered Accountant before its submission within 2 years from the relevant date. The refund application filed via RFD-01 shall be electronically processed by the competent tax authority and all the communication between the taxpayer and tax authorities shall be maintained online.

The refund amount shall be credited to the claimant’s bank account through the PFMS (Public Finance Management System) after validation of the bank account details. As per section 54(14) of the CGST Act, a registered taxpayer shall receive no refund if the refund amount is less than Rs. 1000. However, it must be noted that the limit of Rs. 1000 for refund is applied separately to each tax head and not on a cumulative basis.


GST payments and refunds have been made easier for taxpayers with its seamless, online GST Network. For additional GST-related information, you can visit Finserv MARKETS, a trusted e-marketplace, where you can avail a variety of loan, insurance, investment products to meet your financial requirements.

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