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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.
GST
Paying tax and interest from the right ledger
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Provisions
Sec 49(4), CGST Act 2017; Rule 142(2) and (3), CGST Rules 2017
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.
Close
- 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.
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