GST Payment: What is it, How to Pay & Best Practices

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The GST is a comprehensive indirect tax regime implemented in India in 2017. It replaced many central and state-level taxes, aiming to simplify the tax system and boost economic activity.

So, whether you're a business owner or an individual making taxable purchases, this article can help you understand GST and its payment, and best practices to pay it online.

What is GST?

GST, which stands for Goods and Services Tax, is an indirect tax levied on the supply of goods and services in India. It was introduced to replace multiple indirect taxes such as VAT, service tax, and excise duty, creating a unified taxation system.

GST is classified into three categories:

CGST (Central GST): Collected by the central government.
SGST (State GST): Collected by state governments.
IGST (Integrated GST): Collected by the central government for inter-state transactions and imports.

The tax is still applied at each stage of the production and distribution process, but it is refunded to all parties in the chain except the final consumer.

What is the rule for GST payment?

First off, GST returns must be filed regularly, detailing the tax collected and paid. And the GST payment rules mandate that businesses with an annual turnover exceeding a certain threshold must register and comply with GST regulations. The threshold varies depending on the business type and location, but generally, it is ₹40 lakhs for goods and ₹20 lakhs for services. Registered taxpayers are required to pay GST on a monthly or quarterly basis, depending on their filing category.

For monthly filers, the payment must be made by the 20th of the subsequent month, while quarterly filers have until the 22nd or 24th of the month following the quarter.

How do I pay GST online?

The convenience of online GST payment simplifies the process for businesses and individuals alike. Here's a breakdown:

Register on the GST Portal: Businesses need to register for GST on the official portal (https://services.gst.gov.in/services/login).
File GST Returns: Businesses file regular GST returns electronically, reflecting their sales and tax liability.
Generate Challan: Based on the tax liability calculated in the return, a challan (payment slip) is generated.
Choose Payment Method: Select your preferred online payment method, such as net banking, credit card, or debit card.
Complete Payment: Follow the on-screen instructions to complete the online payment through your chosen gateway.

Tips to pay GST online

File Returns Timely: Ensure timely filing of GST returns to avoid penalties and interest charges on delayed payments.
Double-check Challan Details: Carefully verify details like tax amount, period, and challan type before making the payment.
Maintain Records: Download and store a copy of the e-challan receipt for future reference and potential dispute resolution.
Consider Professional Guidance: Businesses with complex transactions or unfamiliar with the process can benefit from consulting a tax advisor for assistance.

Endnote

GST is a critical component of India's tax system, streamlining the process and making it more transparent. Paying GST online is not just about compliance but also about ensuring that your business operations run smoothly. To pay GST online, you can use a digital savings account like 811 Super Account by Kotak811, which offers cashback.

FAQs

1. How do I pay nil GST online?

To pay nil GST online, log into the GST portal, file a nil return under 'Services,' and submit without payment.

2. Can I pay GST by credit card?

Yes, you can pay GST by credit card through the GST portal by selecting credit card as the payment option during the process.

3. What happens if you don't pay GST?

Failure to pay GST results in penalties, interest on the unpaid amount, and potential legal action, leading to increased financial liabilities.

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This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empanelled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees, and contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.