CGST Act · Chapter X
Payment of Tax
s. 49Payment of tax
Section 49 is the payment machinery of GST. Cash goes into an electronic cash ledger, self-assessed credit into an electronic credit ledger, and liabilities into a liability register. The section fixes how credit of each tax may be used against which tax, the order in which dues are paid, and presumes that tax paid was passed on to the customer.
- Under section 49 of the CGST Act, 2017 deposits are credited to the electronic cash ledger and self-assessed input tax credit to the electronic credit ledger; the cash ledger may pay any amount, the credit ledger only output tax.
- IGST credit is used first for IGST and then for CGST and SGST; CGST credit for CGST and then IGST; SGST credit for SGST and then IGST — but never CGST credit for SGST or the reverse (section 49(5)), and IGST credit must be exhausted first (section 49A, Rule 88A).
- Dues are discharged in a fixed order: earlier periods' self-assessed tax and dues, then the current period's, then demands (section 49(8)).
- Every person who has paid GST is presumed, unless the contrary is proved, to have passed on its full incidence to the recipient (section 49(9)) — the basis of the unjust-enrichment bar on refunds.
- Cash ledger balances may be transferred between tax heads and, from 05.07.2022, to a distinct person with the same PAN (section 49(10)); the Government may cap the share of output tax paid through credit (section 49(12)) — Rule 86B requires at least 1% in cash for taxable supplies above Rs. 50 lakh a month, with exceptions.
s. 49AUtilisation conditions
Section 49A makes IGST credit the first to be spent. Only when it is exhausted may CGST, SGST or UTGST credit be used — so that IGST collected by the Centre on inter-State supplies is set off before credits that belong to the Centre or a State alone.
- Under section 49A of the CGST Act, 2017, notwithstanding section 49, CGST, SGST or UTGST credit may be used to pay IGST, CGST, SGST or UTGST only after IGST credit has been fully used for that payment.
- Rule 88A (from 29.03.2019) lets IGST credit, after paying IGST, be applied to CGST and SGST/UTGST in any order and proportion, so that it is fully used.
s. 49BOrder of utilisation
Section 49B is the rule-making power behind Rule 88A. It lets the Government, on the Council's recommendation, set the order of using credits — but never to let CGST credit pay SGST, or the reverse.
- Under section 49B of the CGST Act, 2017 the Government may, on the recommendations of the GST Council, prescribe the order and manner of using IGST, CGST, SGST and UTGST credit, notwithstanding anything in Chapter X.
- The power is subject to section 49(5)(e) and (f): CGST credit cannot pay SGST or UTGST, and SGST or UTGST credit cannot pay CGST.
- It was inserted with effect from 01.02.2019; Rule 88A, made under it, took effect on 29.03.2019.
s. 50Interest on delayed payment
Section 50 charges interest when tax reaches the Government late, and when credit wrongly taken has actually been used. Interest is compensation for the delay, so it runs only on tax the Government was kept out of — for a late return, only on the part paid in cash, and for wrong credit, only once it was utilised.
- Under section 50(1) of the CGST Act, 2017 a person who fails to pay tax within the prescribed period pays interest, on its own, at the notified rate — 18% a year — for the period the tax remains unpaid, calculated from the day after it was due (section 50(2)).
- Where a return is filed late, interest is charged only on the portion of tax paid in cash, not on tax paid from the credit ledger — unless the return is filed after proceedings under section 73, 74 or 74A have begun (proviso, effective from 01.07.2017).
- Interest on input tax credit is payable only where it is wrongly availed and utilised, at 18% (section 50(3), substituted from 01.07.2017); credit is "utilised" when the credit ledger balance falls below the wrongly availed amount (Rule 88B).
- Interest is compensatory and follows the tax actually withheld (Pratibha Processors v Union of India, SC 1996).
- The Madras High Court held in Eicher Motors (2024) that no interest is due where the tax was in the cash ledger by the due date, though the return was filed late.
s. 51TDS
Section 51 makes certain buyers — mainly Government bodies — deduct a slice of GST from payments to their suppliers and pay it to the Government. The supplier gets the deduction as a credit in its cash ledger. It is an audit trail on public procurement, not an extra tax.
- Under section 51(1) of the CGST Act, 2017 a Government department or establishment, local authority, Government agency or notified person must deduct 1% CGST (with 1% SGST, or 2% IGST) from payments to a supplier of taxable goods or services where the value of supply under a contract exceeds Rs. 2.5 lakh, excluding tax.
- No deduction is made where the supplier's location and the place of supply are both in a State or UT other than the recipient's State of registration (proviso).
- The deductor pays the amount by the 10th of the following month, files GSTR-7 and issues a certificate (GSTR-7A); the supplier claims the amount in its electronic cash ledger (section 51(5)).
- Section 51 came into force on 01.10.2018 (Notification 50/2018-Central Tax). From 10.10.2024 registered buyers of metal scrap from registered suppliers must also deduct (Notification 25/2024-Central Tax).
s. 52TCS by ECO
Section 52 makes an e-commerce operator that collects payment for sellers on its platform keep back a small percentage and pay it to the Government, reporting each seller's sales. The seller gets the amount as a credit in its cash ledger; the department gets an independent record of platform sales.
- Under section 52(1) of the CGST Act, 2017 an e-commerce operator, not being an agent, must collect tax at a notified rate (not exceeding 1%) on the net value of taxable supplies made through it by other suppliers, where it collects the consideration.
- The rate is 0.25% CGST and 0.25% SGST, or 0.5% IGST, from 10.07.2024 (earlier 0.5% and 1%); supplies on which the operator itself pays tax under section 9(5) are excluded.
- The operator pays the amount and files a monthly statement (GSTR-8) by the 10th of the following month, and an annual statement by 31 December; the seller claims the amount in its cash ledger.
- A Deputy Commissioner or above may require the operator to give details of supplies or of sellers' stock in its warehouses, within fifteen working days, on pain of a penalty up to Rs. 25,000.
- Section 52 came into force on 01.10.2018 (Notification 51/2018-Central Tax); from 01.10.2023 a statement cannot be filed more than three years late.
s. 53Transfer of ITC
Section 53 is government accounting. A taxpayer who uses CGST credit to pay IGST has, in effect, paid IGST out of money collected as CGST. The Centre moves the same amount from its CGST account to the IGST account so that each account reflects the tax it really holds.
- Under section 53 of the CGST Act, 2017, where CGST credit is used to pay IGST under section 49(5) as reflected in a valid return, the CGST collected stands reduced by that amount and the Central Government transfers an equal amount from the CGST account to the IGST account.
- It does not affect the taxpayer; it is the settlement mechanism behind cross-utilisation of credit. The mirror provisions for IGST credit used to pay CGST or SGST are in sections 17 and 18 of the IGST Act.
s. 53ATransfer of certain amounts
Section 53A is the accounting counterpart of section 49(10). When a taxpayer moves cash from its CGST head to its SGST or UTGST head, the money already received by the Centre is passed on to the State or Union territory.
- Under section 53A of the CGST Act, 2017, where an amount is transferred from the electronic cash ledger under the CGST Act to that under a State or UT GST Act, the Government transfers an equal amount to the State or UT tax account.
- It was inserted by the Finance (No. 2) Act, 2019 with effect from 01.01.2020, alongside section 49(10).