GST Payment: Methods, Types,  Rules & Procedure

Whether you’re registering for GST, filing your monthly or quarterly GST returns, or settling interest and penalties, making a GST payment is a crucial part of the compliance process. Every taxpayer under the GST regime is required to pay tax dues accurately and on time to avoid legal complications. GST payments ensure smooth functioning of business operations and help maintain a clean tax record. But how does the GST payment process work? What are the different modes of payment? In this article, we’ll walk you through everything you need to know about GST payments — from timelines and methods to key tips.

What is GST Payment?

GST payment refers to the tax amount that businesses and individuals must pay to the government under the Goods and Services Tax (GST) system. It is calculated based on the applicable GST rates on the goods or services supplied by the taxpayer. Businesses act as intermediaries by collecting GST from customers at the point of sale and then depositing it with the government. This payment plays a vital role in generating public revenue, which is used to fund infrastructure, development projects, and essential public services.

Who Should Pay GST?

The responsibility for paying GST primarily depends on the nature of the transaction and the parties involved in it. Here's a breakdown of who is liable to pay GST:

1. Registered Taxable Persons

Any individual or business whose aggregate annual turnover exceeds the prescribed threshold limit (₹40 lakh for goods, ₹20 lakh for services in most states) is required to register under GST. Once registered, they must:

• Collect GST on outward supplies.
• File regular returns.
• Pay the net GST liability (Output GST – Input Tax Credit). 

2. Suppliers of Goods and Services

Suppliers—whether individuals, firms, companies, or other entities—who provide taxable goods or services are responsible for:

• Charging GST on their invoices.
• Collecting GST from customers.
• Remitting the collected amount to the government.

3. Recipients Under Reverse Charge Mechanism (RCM)

In specific cases notified by the government, the recipient of goods or services is liable to pay GST instead of the supplier. This is known as the Reverse Charge Mechanism (RCM). It applies, for example, when goods/services are received from an unregistered supplier or in certain B2B transactions.

4. Importers

GST also applies to imported goods and services. Importers must pay Integrated GST (IGST) at the time of customs clearance. For services, GST is paid under RCM at the time of payment or invoice generation, whichever is earlier.

In Summary: Who Pays GST?

Also read about What is the minimum turnover for GST?

What Are the Payments to Be Made Under GST?

Under India’s Goods and Services Tax (GST) framework, registered taxpayers are required to make various types of payments depending on the nature of the transaction and their role in the supply chain.  

1. Core GST Tax Components

GST is primarily divided into three types based on the location of the supply: IGST, CGST, and SGST.

• IGST (Integrated GST): Integrated GST (IGST) is applicable when goods or services are supplied from one state to another. The entire tax amount is paid to the Central Government.
• CGST (Central GST): Applicable when: Supply is made within the same state (intra-state) and paid to the Central Government.
  
• SGST (State GST): Applicable when: Supply is made within the same state (intra-state) and paid to the respective State Government.

GST Liability Based on Supply Scenario

2. Additional Payments Under GST

In addition to the core taxes mentioned above, businesses may also need to make other specific payments depending on the nature of their transactions.

• Tax Deducted at Source (TDS): Tax Deducted at Source (TDS) applies to certain notified entities such as government departments. In this system, the tax is deducted at the source of the transaction before making the payment to the supplier. For example, if a government agency awards a contract worth ₹10 lakh to a builder, it will deduct ₹10,000 (1%) as TDS and pay the balance ₹9.90 lakh to the builder.
• Tax Collected at Source (TCS): Tax Collected at Source (TCS) is applicable to e-commerce operators like Amazon or Flipkart. When a seller lists goods or services through an e-commerce platform, the operator collects tax at the rate of 2% before transferring the remaining payment to the seller. As of now, this provision is relaxed and applicable only to specific categories notified by the government.
• Reverse Charge Mechanism (RCM): The Reverse Charge Mechanism (RCM) is another important concept. Here, the responsibility to pay tax shifts from the supplier to the recipient. This generally applies in cases such as services received from unregistered vendors or legal professionals. RCM payments must be made in cash and cannot be set off using Input Tax Credit.

3. Other Statutory Payments Under GST

Apart from regular tax liabilities, businesses may also be required to make additional payments due to late filings or errors in tax declarations.

• Interest on Late Payment: Interest becomes payable if the GST dues are not paid on time. The standard interest rate is 18% per annum for delayed payment of tax. A higher rate of 24% per annum is applicable if excess Input Tax Credit is claimed or if tax liability is reduced fraudulently. Interest is calculated based on the number of days the payment is delayed.
• Penalty: Penalties are imposed for various forms of non-compliance such as failure to file returns, incorrect information, or tax evasion. A common penalty amount is ₹10,000 or the amount of tax evaded, whichever is higher.
• Late Fees: Late fees are charged when a taxpayer delays filing GST returns like GSTR-3B or GSTR-1. The fee is ₹25 per day under CGST and ₹25 per day under SGST, totaling ₹50 per day. These fees are subject to a maximum limit, depending on the nature of the return and the duration of the delay.

GST Payment Process for Different Types of Taxpayers

While the general principles of GST payment remain consistent across taxpayers, the process may vary slightly depending on the type of taxpayer and their applicable filing scheme. Below is a detailed overview of how different categories of taxpayers are required to manage their GST payments.

1. Regular Taxpayers

Regular taxpayers are those who file monthly GSTR-3B returns and are not enrolled in the composition or QRMP schemes.

• Challan Usage: GST payments are made using Form PMT-06, which adds funds to the Electronic Cash Ledger.
• Integration with GSTR-3B: The GST challan details auto-populate into the GSTR-3B return, ensuring seamless reconciliation of liabilities.
• Payment Flexibility: Challans can be generated and paid: Before or after logging in to the GST portal, at the time of filing GSTR-3B.

2. Quarterly Taxpayers (QRMP Scheme)

Taxpayers under the Quarterly Return Filing and Monthly Payment (QRMP) scheme file GSTR-3B quarterly but pay taxes monthly.

• Monthly Payments via PMT-06: Tax liability for the first two months of the quarter is paid using Form PMT-06.
• Final Payment with GSTR-3B: The third month's payment is made while filing the quarterly GSTR-3B return. 
• Process Note: Separate payment instructions and deadlines apply, which are outlined in QRMP guidelines.  

3. Taxpayers with Nil GST Returns

These are taxpayers who have no sales, purchases, or tax liability during the reporting period.

• Zero Liability: Since there is no tax payable, no challan generation or payment is required.
• Nil Filing Compliance: Despite no liability, taxpayers must still file a nil return to stay compliant.

4. Composition Taxpayers

Businesses under the Composition Scheme pay GST at a fixed rate based on their turnover, instead of regular GST rates.

• Quarterly Reporting via CMP-08: These taxpayers file Form CMP-08 quarterly, summarising their total sales/turnover.
• Tax Payment Based on Sales: The GST amount due is paid along with the submission of CMP-08.
• Simple Compliance: The process is designed to be simpler than regular filing, with fewer returns and fixed-rate tax payments.

Understanding the Three Ledgers in GST Payment

Every GST-registered taxpayer interacts with three main digital ledgers that help manage payment, credit, and liability.

Electronic Tax Liability Register

• Records all payable amounts under GST.
• Includes taxes, interest, late fees, and penalties.
• Acts as the official record of your dues.

Electronic Cash Ledger

• Shows all cash deposits made via PMT-06.
• Used for paying off liabilities that can't be paid using ITC (like interest or penalties).
• Essential for actual fund settlement under GST.

Electronic Credit Ledger

• Reflects the Input Tax Credit (ITC) available.
• Can be used to offset GST liabilities (CGST, SGST, IGST), but not for interest or penalties.
• ITC is typically claimed via GSTR-2B or GSTR-3B based on eligible purchases.

How to Calculate GST Payment to Be Made

Calculating the GST payment involves understanding your total tax liability, eligible credits, and any applicable adjustments like TDS/TCS or penalties. Here's how the process works:

Basic Formula for GST Payment

To arrive at the total GST payment due, you typically use the following formula:

Outward Tax Liability − Input Tax Credit (ITC) − TDS/TCS + Interest + Late Fees = Final GST Payable

Let’s break this down step-by-step.

• Outward Tax Liability: This refers to the total GST collected by the taxpayer on sales or services provided during a specific tax period.
• Input Tax Credit (ITC): This refers to the GST paid on purchases or inward supplies. Registered taxpayers can claim this amount as a credit to reduce their tax liability.
• Adjustment for TDS/TCS: If Tax Deducted at Source (TDS) or Tax Collected at Source (TCS) is applicable, these amounts are deducted from the tax liability. They reduce the net amount payable in cash.
• Addition of Interest and Late Fees: Any interest or late fees for delayed payment or late return filing must be added to the tax liability. Importantly, ITC cannot be claimed for these charges. They must be paid in cash.

Calculation Process by Type of Dealer

Regular Dealer

• A regular dealer calculates GST payment as follows:
• Determine the total outward GST liability on sales.
• Subtract the eligible ITC on purchases and expenses.
• Subtract TDS/TCS (if applicable and already deposited).
• Add any interest and late fees, if applicable.

The net amount is the final GST payable, usually paid via the GST portal using a challan.

For example, if a dealer collects ₹1,00,000 in GST from sales and has an ITC of ₹70,000 from purchases, and TDS of ₹5,000 has already been deposited:

GST Payable = ₹1,00,000 − ₹70,000 − ₹5,000 = ₹25,000 (plus any interest/late fees in cash, if applicable)

Composition Dealer

For a composition dealer, the GST calculation is simpler. They are not allowed to claim ITC and instead pay tax at a fixed rate on their total turnover. The applicable rates vary based on the nature of business:

•  1% for traders
• 2% for manufacturers
• 5% for restaurants (not serving alcohol)

The tax is calculated on aggregate turnover, and the dealer pays GST quarterly through Form CMP-08.

For example, if a composition dealer with a trading business has quarterly turnover of ₹10,00,000:

 GST Payable = ₹10,00,000 × 1% = ₹10,000

This amount must be paid entirely in cash, as ITC is not available under the composition scheme.

Payments and Refunds

Once the final amount is calculated, it must be paid through the GST portal using the appropriate challan. Payments can be made using an electronic cash ledger (through bank or UPI) or adjusted through available credit in the electronic credit ledger.

If the tax paid exceeds the actual liability, the taxpayer can file a refund claim using Form RFD-01 under GST. Refunds are allowed for excess payments, ITC accumulation due to exports, inverted duty structure, and other notified reasons.

When Should GST Payment Be Made?

Timely payment of GST is crucial to remain compliant with the law and avoid penalties, interest, or legal action. The due date for GST payment depends on the type of taxpayer and the nature of the return being filed.

1. Regular Dealers

For regular taxpayers who file GSTR-3B, GST payment must be made on or before the 20th of the following month. The tax liability must be discharged before filing the return, using the electronic cash ledger (for cash payment) or the electronic credit ledger (for ITC).

Example: For supplies made in July, the GST payment should be completed by 20th August.

2. Composition Dealers

Dealers registered under the Composition Scheme are required to pay GST quarterly using Form CMP-08. The due date for payment is the 18th of the month following the quarter.

Example: For the April–June quarter, GST must be paid by 18th July.

3. TDS Deductors

Persons or entities liable to deduct Tax Deducted at Source (TDS) under GST must deposit the deducted amount to the government by the 10th of the following month in which the deduction is made.

Example: If TDS is deducted in June, it should be paid by 10th July.

4. E-commerce Operators (TCS Collection)

E-commerce platforms required to collect Tax Collected at Source (TCS) must deposit the tax by the 10th of the following month during which the transaction occurred.

5. Reverse Charge Payments

When a registered person is liable to pay tax under Reverse Charge Mechanism (RCM), the tax should be paid in the same month in which the supply was received, and before filing GSTR-3B.

Summary Table: GST Payment Due Dates

Ledgers for GST Payment Process

The GST payment mechanism in India is a streamlined digital process that relies on three essential ledgers. These electronic ledgers are maintained on the GST portal and are integral to tracking liabilities, managing funds, and utilising input tax credit (ITC).  

1. Electronic Tax Liability Register

This ledger provides a real-time summary of all outstanding liabilities under GST.

Key Features: 

• Captures all tax obligations, including CGST, SGST, IGST, and Cess.
• Also records interest, penalties, and late fees, if applicable 
• Updated automatically upon filing returns or when a demand notice is issued.

Purpose: It acts as a comprehensive dashboard of dues, allowing taxpayers to monitor and reconcile their total GST liabilities before making payments.

2. Electronic Cash Ledger

The Electronic Cash Ledger functions like a digital wallet for GST payments.

Key Features:

• Reflects all cash deposits made by the taxpayer.
• Used to pay off tax, interest, penalties, late fees, and other dues.
• Funds are deposited through challans (Form PMT-06) generated on the GST portal.

Purpose: This ledger enables real-time settlement of liabilities using actual funds, similar to a pre-paid account dedicated solely to GST obligations.

3. Electronic Credit Ledger

This ledger tracks the Input Tax Credit (ITC) available to a taxpayer.

Key Features:

• ITC is credited to this ledger based on self-assessment in GSTR-2B or GSTR-3B 
• Only eligible credits from business purchases can be utilised.
• Can be used only for payment of output GST liability (tax component).
• Cannot be used to pay interest, penalties, or late fees. 

Purpose: It reduces the taxpayer’s out-of-pocket expenses by allowing the use of ITC to pay GST dues, improving cash flow efficiency for businesses.

Mandatory Online Payment for Large Amounts

If the total tax liability exceeds ₹10,000, payment must be made online; offline modes like cash or cheque are not allowed beyond this limit.

Methods for Making a GST Payment

The Goods and Services Tax (GST) payment can be made using several convenient methods offered by the GST portal and authorised banks. Depending on your preference and transaction size, you may choose from the following options:

1. Online Payment via GST Portal

The most widely used and efficient method is through the official GST portal.

Steps:

• Login to the GST portal using your credentials.
• Go to ‘Services’ > ‘Payments’ > ‘Create Challan’.
• Fill in the appropriate tax heads (CGST, SGST, IGST, etc.) and enter the required amounts.

Select a preferred payment mode:

• Net Banking
• Credit/Debit Card
• NEFT/RTGS
• Proceed to complete the payment.

After successful payment, save or print the Challan Reference Number (CRN) for future reference.

2. Payment Through Banks

• You can also make GST payments physically at an authorized bank after generating a challan.
• Generate a challan on the GST portal by selecting your tax heads and payment amount.
• Visit the selected authorised bank branch.
• Provide the printed challan and make the payment through:
• Cash
• Cheque
• Demand Draft

Ensure the bank processes the transaction and gives you a payment confirmation receipt.

3. Over-the-Counter (OTC) Payment

OTC payments are suitable for small transactions up to ₹10,000.

Steps:

• Generate the challan online from the GST portal.
• Visit a nearby authorised bank that allows OTC payments.
• Pay the amount using:
  • Cash
  • Cheque
  • Demand Draft
• Collect and preserve the bank receipt as proof of payment.

Note: OTC payments are restricted to ₹10,000 per challan and are subject to bank authorisation.

4. UPI (Unified Payments Interface)

A new and convenient option, UPI, is now accepted for GST payments through the portal.

Steps:

• During the challan payment process, select UPI as the payment mode.
• Use a UPI-enabled mobile app (e.g., Google Pay, PhonePe, Paytm) to scan the QR code or enter the UPI ID.
• Authorise the payment through the app.
• Confirm the transaction and save the transaction details for your records.

How to Pay GST Online

Making a GST payment online is a straightforward process through the official GST portal. Here's a step-by-step guide:

Step 1: Log In to the GST Portal

Visit the official GST portal: https://www.gst.gov.in

Use your registered credentials (GSTIN, username, and password) to log in.

Step 2: Access the Payments Section

• After logging in, go to the ‘Services’ tab.
• Select ‘Payments’ > ‘Create Challan’.

Step 3: Fill in the Challan Details

Enter the appropriate tax amounts under relevant heads, such as:

• CGST
• SGST
• IGST
• Cess

Choose the payment method (Net Banking, Debit/Credit Card, NEFT/RTGS, etc.).

Step 4: Create and Review the Challan

• Click on ‘Create Challan’ after verifying all details.
• If unsure, you may click ‘Save’ to store the challan for future edits.
• Finalize only when all figures are correctly entered.

Step 5: Proceed with Payment

Choose from the following payment modes:

• Online Payment (Net Banking / Debit / Credit Card / UPI)
• NEFT / RTGS (from a bank account)
• Over-the-Counter (OTC) (for payments up to ₹10,000 only)

Step 6: Acknowledgement and Receipt

• For online payments, a Challan Receipt is generated immediately—download and save it.
• For offline payments, get a stamped acknowledgement from the bank, and ensure the payment is reflected in your GST account.

Note: If your total GST liability exceeds ₹10,000, online payment is mandatory.

How to Make GST Payment Offline

If you prefer offline payment, follow these steps:

Step 1: Generate a GST Payment Challan

Log in to the GST portal.

• Navigate to: Services > Payments > Create Challan
• Fill in tax details and click ‘Generate Challan’.
• Download and print the challan.

Step 2: Visit an Authorized Bank

• Go to any GSTN-authorized bank that accepts GST payments.
• Carry the printed challan.

Step 3: Make the Payment

• Submit the challan at the bank counter.
• Pay using cash, cheque, or demand draft.
• Collect the bank-stamped acknowledgement as proof of payment.

Step 4: Verify Payment Status

• Return to the GST portal.
• Go to ‘Track Payment Status’ under the ‘Payments’ tab.
• Enter the CIN (Challan Identification Number) found on the receipt to confirm the transaction.

What Is the Penalty for Non-Payment or Delayed Payment of GST?

Timely payment of GST is not just a compliance requirement — it also helps avoid interest and penalties that can significantly increase your tax burden. Let’s break down the consequences of failing to pay GST on time or in full:

1. Interest on Delayed Payment

If a registered dealer fails to pay GST on time, they are liable to pay interest on the outstanding amount.

Interest Rate: 18% per annum is charged on the unpaid tax amount. Interest is calculated from the day after the due date till the actual date of payment.

Example:If ₹50,000 GST was due on 20th May but paid on 30th May, interest is calculated for 10 days at 18% p.a.

2. Penalty for Non-Payment or Short Payment

If the GST is short paid, not paid, or erroneously paid, a penalty is also imposed in addition to interest.

Penalty Amount: The higher of: ₹10,000 OR 10% of the tax amount short paid or unpaid.

Example: If ₹1,00,000 in GST was unpaid:

• 10% of ₹1,00,000 = ₹10,000
• Therefore, the penalty = ₹10,000 (whichever is higher)
• If only ₹30,000 was unpaid:
• 10% = ₹3,000
• Since ₹10,000 is higher, penalty = ₹10,000

Common Mistakes During GST Payment (Online) & How to Avoid Them

GST Payment Forms (PMT Series)

How to Track GST Payment Status (Per Challan)

• Go to: https://www.gst.gov.in
• On the homepage, click Services > Payments > Track Payment Status
• Enter your: GSTIN (or Temporary ID, if applicable) and CPIN (Common Portal Identification Number)
• Click Search
• The status of your payment (e.g., Success, Pending, Failed) will be displayed in real time.

Click here to get detailed steps on how to track GST Payment Status 

How to Check GST Payment History

• Log in to the GST portal: https://www.gst.gov.in
• Navigate to: Services > Payments > Challan History
• View your entire challan/payment history, including:
• Date of challan generation
• Amount paid
• Mode of payment (online/offline)
• Status of payment
• CIN details

This helps in keeping accurate financial records and ensures your tax payments are fully traceable and compliant.

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