Payments under GST - Business Process
The Joint Committee has submitted its report on various business processes in April 2015 and it was made public in October 2015. The report on GST payment process deals with aspects like how the payment would be processed and accounted internally, in a comprehensive manner. It also provides some limited information on types of payment of GST with procedures. The objective appears to be to ensure transparency, responsiveness of the IT infrastructure and simplicity.
However, the aspect of completeness of alternatives including certain critical issues like adjustment of excess GST paid / GST paid wrongly under CGST instead of SGST or how to adjust the SGST paid by selecting wrong State code do not seem to have been addressed. The report appears to be incomplete to that extent.
The payment of GST would involve different components viz., SGST/ CGST/IGST/additional tax by selecting respective accounting codes. However there appears to be a variance with respect to codes to be provided in registration or annual return under GST and payment codes. Hence here also assessees may expect reintroduction of all categories of services / HSN codes selection for payment of GST, which was the case after introduction of negative list. In this article, we limit our observations to the positive aspects of the report with some recommendations.
1. GST can be paid through Internet banking / Debit card / Credit card /over the counter / NEFT and RTGS from authorised banks.
2. GST can be paid even through temporary registration during transit period.
3. Assessees are required to generate challan by filling necessary details before paying GST. Assessee can also save the partly filled challan.
4. The challan provides the unique Common Portal Identification Number on generation. Further challans are time barred.
5. Once the payment is done a SMS would be received by the assessee in case OTC payment.
6. In case of cheque bouncing, it would be intimated to the assessee by GSTN.
7. In case of NEFT / RTGS the challan would be valid for 30 days with RBI.
8. The Taxpayer must update the Unique Transaction Reference (UTR) on the GSTN Portal to enable matching of the receipts.
9. Internal arrangement between GSTN and authorised banks with RBI has been done to reconcile the receipts of tax. We hope that the assessees would not be troubled or harassed in case of mis-match.
10. In the course of enforcement and anti-evasion investigations, if the person is not already registered, the revenue officer would create a temporary GSTIN for payment of GST.
11. In case of error in creating the fund by the banker, the same can be rectified by withdrawing from one head to another head. However such rectification is required to be done by end of the day or else manual procedure needs to be followed by filing a memorandum of error.
12. In case error is in totalling and excess tax is paid, then the assessee needs to go in for refund or can carry forward and adjust it against next month liability. Here the Government may bring in sufficient safeguards in the GST law with respect to unjust enrichment.
Suggestions / Recommendations by authors:
1. Once the challan is generated an option to alter or modify the challan at once should be provided, as genuine errors may occur.
2. It is provided in the report that in case the payment is made based on a time barred challan the bank should refund the GST amount to the assessee’s bank account. Instead of this, a provision in the system not to accept such time barred challan is preferable.
3. Otherwise an option to generate offline challan without login into GSTN is required to be provided to avoid practical difficulties.
4. To make the payment of GST through gateway the selected assessee needs to pay extra charges to GSTN. This may be an extra burden to the assessee and should be avoided.
5. In case of OTC payment, once a cheque bounces the assessee would not be eligible for OTC payment again. This may not be correct, instead of this certain charges may be imposed on the assessee whenever cheque gets bounced. Business rules needs to be applied and not archaic thought processes. A reasonable opportunity of being heard should be provided before any action.
6. The report says that in case the payment is received after the expiry of 30 days, the RBI would return the amount to the remitter bank. Instead of returning the amount the option of not accepting the time barred challan is preferable. Otherwise at a later stage the interest liability would be an extra burden along with tax on the assessees.
7. As per the report in case the assessee uses the time barred challan for payment of GST for more than two times then the assessee is barred by using this option for payment of GST. This may not be correct, instead the time barred challan should not be accepted by the bank and the system.
8. The payment is required to be done under major head that is CGST / SGST / IGST / additional tax. However for obtaining registration and filing annual GST return the assessee needs to provide HSN code for goods supplied and SAC (Service Accounting Code) for services supplied. The assessees should not be burdened to support the statistical requirement of the Government as the distinction regarding types of services or goods should be given up in GST. This would reduce the time and cost involved in compliance.
9. In case the assessee makes payment of CGST under SGST by mistake, there is no procedure provided to adjust the same.
10. Even if the assessee makes payment of CGST / SGST / IGST together for the entire turnover, he is required to maintain the tax paid for each goods/services supplied by him separately. These details are required to be provided in the annual return to be filed under GST. Hence there is no simplicity or drastic change in payment procedure compared to the present indirect tax regime.
11. At the time of filing GSTR-1 return the assessee needs to provide each invoice details along with HSN / SAC. The GST rate may be different for each type of goods / services supplied by the assessee. Hence he is required to provide the rate of tax against each invoice and tax amount under CGST/SGST/IGST. Hence while making the payment the assessee may be required to follow the same method to compute so that it would match with GSTR-1 w.r.t CGST / SGST / IGST.
12. In case the payment of SGST is made by selecting wrong State code there is no procedure provided to rectify the same.
13. GST payment cannot be done by debiting the export scrips. However the benefit of payment to tax by using scrips is available in the present law. Hence it appears that the assessees may not be in a position to utilise the scrips provided under FTP provisions in the GST regime. The dichotomy between the policies of the Commerce and Finance Ministries may further worsen to the detriment of the assessee.
The report does not seem to be complete and is replete with internal mechanisms with which the public/assessees are least interested in. The report needs to be revisited and aspects related to tax payments concerning the tax payers and probable errors need to be addressed. The authors are of the view that this report does not in any way forward its objective of being responsive to the tax payer and is certainly not simple. It also does not seem to consider the hardship caused to tax payers in terms of increased compliance and more procedures.
- By CA Madhukar N Hiregange & Adv. Naveen Kumar K S
We thank CA Lakshmi G K for assistance in preparation of this article. Please send your feedback to firstname.lastname@example.org or email@example.com)
 For more information on payments in GST regime and recommendations the readers may refer to the book titled “Goods and Service Tax – A Primer” by Madhukar N.Hiregange & K.S.Naveen Kumar