Payments & Refunds within GST


The GST law states that once a business files the summaries of all their sales and inward purchases, it must then file the third form that states the tax liabilities of the sales and purchases. Once they’ve done this, they have to finally make their GST payment. In cases where the business needs to claim a refund, under the GST, it will have to fill certain forms and submit them to the GST portal. So, what are these payments and how does one claim a refund. We take a look at the answers below:

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Let us first look at who is supposed to pay GST, The GST law says that the following people have to pay GST:

  • E-commerce operators registered under GST and required to collect tax
  • E-commerce operators registered under GST and through whom certain categories of notified supplies are made.
  • Persons registered under GST and required to deduct tax (TDS).
  • Persons registered under GST who make tax payments under the reverse charge mechanism.
  • Persons registered under GST and making taxable supplies under GST.

What is the set-time frame for making a GST Payment that is due?

The law states that one has to file and submit the GSTR 3 form and make their GST payments by the 20th of the next month.

What are some key payment components under the GST?

Under GST, the payments are segregated into: –

  • GST- This is paid to the centre when supplying goods within a state.
  • SGST- This is paid to the state when supplying goods within a state.
  • IGST- Paid to the centre when supplying good between two states.

To make it easier in understanding to know in what cases the above mention payments have to be made, here is a small table:VAKIL SEARCG

Apart from the above-mentioned payments, dealers also have to pay TDS and TCS.
Let us look at an example:
Let us say the government hires a contractor to construct a road, the value of this contract is Rs.10 lakhs. On completion of the contract, the government has to pay the contractor the sum of 10 lakhs, but he also has to deduct 10% of the amount which is Rs 10,000 as TDS.

Although it applies to all sellers, TCS majorly applies to e-commerce aggregators and dealers who sell products through e-commerce channels. The TCS rule states that a person will receive payments after a tax deduction of 2%.

In the latest update, the following provisions have been relaxed.

Reverse Charge: This is basically when the liability of payment of tax shifts to the receiver from the supplier.

How is the calculation for GST due done?

The Input Tax Credit ( ITC ) is always deducted from the Outward Tax Liability (OTL) when calculating GST to be paid. In cases of TSD/ TCS, deductions are made from the GST to arrive at a net payable amount.

If you have to pay any late or interest fees, they will be added to the net amount to arrive at a final fee (Interest and late fees always have to be paid in cash & cannot be claimed.) GST payments vary for different types of dealers, let us take a look at two main types of dealers who fall under the ambit of GST.

Composite Dealer

A dealership that has opted to pay GST under the Composite Scheme will find it fairly easy to pay dues. All they need to do is follow a chart available on the GST portal that states fixed percentage GST rates on the outward supplies. For example, traders and manufacturers pay a GST rate of 1 % on sales, while restaurants who don’t serve alcohol have to pay a 5 % GST rate.
Regular Dealer
Unlike with the composite dealer, those who fall into the category of regular dealers have to pay GST on the differential amount between ITC and the outward tax liability. This means that those who fall into this category are eligible to claim Income Tax Credit.
What are some ways in which GST payments can be made?

A person who needs to make a GST payment can do so via the Credit or Cash Ledger systems. In the Credit Ledger system, the credit Income Tax Credit for GST payments can be claimed. However, it is to be noted that credit will only be given for tax liability and not any late or interest fee.
What and where are these electronic ledgers?

VK 2You have three basic electronic ledger systems, Liability, Cash and Credit. The Cash Ledger System is used to make either online payments. However to make payments through this system a challan has to be generated, this can be done on the GST portal. While the government allows GST to be paid in cash, tax liability amounting to more than a thousand rupees needs to paid online.

What are the consequences for non-payment of GST?

Yes, there is an 18% interest charged for non-payment, short payment, and late payment of GST. Besides, there is also a penalty that goes to as high as 10,000 rupees or 10% of the tax liable in cases of short payment or nonpayment of GST.

We have talked a lot about payments in GST in this section, now let us take a look at refunds.


If you have paid more GST that what you are liable for, you can apply for a refund under the GST scheme. The format for refunds is very simple and standardized. It is an online process and it has a fixed time limit of completion.
When can businesses claim GST refunds?

There are many cases in which GST refunds can be claimed, but the most common ones are:-

  • If there has been an excess payment due to a mistake or an omission.
  • On export of goods and services.
  • International tourists can claim GST refunds if they have bought good here and are taking them back to their country.
  • If you have paid GST on deemed exports.

What is the time period for claiming a GST Refund & how do you claim it?

Currently, the time frame set for claiming GST refunds is 2 years. In order to get a GST refund, one has to fill up the Form RFD 01 stating all relevant details like the reason for refund, and the relevant dates on which excess GST payments were made. This form has to be attested by a Chartered Accountant. If the government fails to pay your refund within the stipulated time, they have to pay you an interest of 24%.

So there you have it, this is the whole gist of the payments and refunds of GST. If you are looking to file your GST, you can easily do it on Vakilsearch without any hassle.

A lawyer with 14 years' experience, Vikram has worked with several well-known corporate law firms before joining Vakilsearch.