GST
Paying DRC-01A amount from the credit ledger
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Facts
Tax can be paid from the electronic credit ledger, but interest and penalty must be paid in cash under Sec 49(4).
Provisions and law
- Sec 49(4), CGST Act 2017Balance in the electronic credit ledger can be used only to pay output tax, not interest, penalty or late fee.
- Rule 142(2), CGST Rules 2017A person paying tax, interest and penalty voluntarily or after an intimation informs the officer in DRC-03, and an acknowledgement issues in DRC-04.
Analysis
If the intimation is for output tax short paid, you can debit available ITC for the tax part in DRC-03. If it is for ITC wrongly claimed, the department expects reversal or payment in cash, so check the cause before using credit. Interest is always paid in cash. Make sure enough cash is in the ledger before filing DRC-03.
Conclusion
- Identify whether the amount is output tax or excess ITC.
- Use credit for output tax where allowed.
- Pay interest and penalty in cash.
- Deposit cash through PMT-06 if the ledger is short.
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Pre-show-cause intimation
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