GST
Paying tax and interest from the right ledger
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Facts
Tax can be paid from the credit ledger, but interest and penalty must be paid in cash. Create a challan if the cash ledger is short.
Provisions and law
- Sec 49(4), CGST Act 2017Credit ledger can be used only for output tax, not interest, penalty or fees
- Rule 142(2) and (3), CGST Rules 2017Payment before or after a notice is intimated in DRC-03; the officer acknowledges it in DRC-04
Analysis
The DRC-03 manual states that interest and penalty are paid only from the cash ledger. Sec 49(4) limits credit use to output tax. Example: tax ₹60,000 and interest ₹18,000; you may pay ₹60,000 from ITC if it is available and allowed, and ₹18,000 must be in cash.
Conclusion
- Check credit and cash ledger balances.
- Use credit only for the tax part.
- Create a PMT-06 challan for interest and any shortfall.
- Complete the DRC-03.
A Savvy can do this for you
Voluntary payment, DRC-03, and linking to demand, DRC-03A
₹1,999
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