How to Pay GST Online Easily? A Step-by-step Guide

What is GST?

The Goods and Services Tax, known as GST, is a type of indirect tax which came into effect in India on 1 July 2017. The main objective of GST was to absorb and replace existing indirect taxes in India, such as value-added tax (VAT), sales tax, excise duty, and so on.

The GST is a single domestic indirect tax that is levied for every value addition during the supply of goods and services within the country.

Broadly, there are three types of taxes applicable under GST:

1. Central GST(CGST)- The Central Goods and Services Tax or CGST is a tax that is levied and collected by the Central Government on the intra-sale of goods and services in India.
   
2. State GST(SGST)- State Goods and Services Tax or SGST is a type of GST collected by different state governments on the intra-sale of goods and services or sales that occur within a particular state.
   
3. Integrated GST(IGST)- The Integrated Goods and Services Tax or IGST is a tax that is levied by the Central Government for an inter-state sale or sales of goods and services that take place between different states in the country.

Why is GST Beneficial?

Before GST, there existed a myriad of indirect taxes levied by the State and Centre, leaving manufacturers and sellers confused as to which one was to be paid and which not. Moreover, every state had different sets of rules and regulations regarding the indirect taxes that needed to be paid for intra-state and inter-state movement of goods and services.

For instance, when goods were manufactured and sold, the Centre charged excise duty on them. Furthermore, VAT was also charged by the states, over and above the excise duty. Additionally, taxes such as octroi, entertainment tax, and local taxes were charged both by the state and the Centre, which often led to an overlapping of taxes by both the state and the Centre.

Besides streamlining the process of taxation, GST has also helped to remove the cascading effect of taxes. Before implementing GST, each purchaser, including the ultimate customer, had to pay tax on tax. With the application of GST, however, the cascading effect of tax has been removed as taxes are only calculated and levied on the value-addition stage at each phase of the transfer of ownership.

How to Pay GST Online?

Before understanding the process of filing your GST tax, let us first examine the registration process for business owners under the GST regime.

Since GST was implemented in 2017, business entities are required to register under GST and received a 15-digit unique Goods and Services Tax Identification Number, abbreviated as GSTIN. The GSTIN is expected to replace the previously existing Tax Identification Number (TIN) assigned to sellers by designated state authorities while registering for VAT.

Under GST, all taxpayers with unique GSTIN codes will be consolidated and registered on a single online platform for better compliance and administration purposes. The GSTIN code allotted to business owners will be state-wise and PAN-based. The first two digits in the GSTIN will represent the state code, followed by the next ten digits that either represent the PAN number of a taxpayer or the business entity, which will be in alphanumeric form, from 1 to 9 and then A to Z.

The thirteenth digit then refers to the number of GST registrations in the given state for the same PAN number. In contrast, the fourteenth digit will be the alphabet ‘Z’ by default for all taxpayers. The last digit or the fifteenth number will indicate a check code to detect any errors and can either be an alphabet or a numeric value.

The registration process for GST can be performed in two ways, either by registering on the GST online portal, or visiting the GST Seva Kendra set up by the Central Government. The entire process of registration and obtaining your GSTIN code is free of cost and very easy.

A Step-by-step Guide to Paying Your GST Online

There are five steps involved in filing for your GST tax online. Let us take a look at each step one-by-one.

Step 1- Login to the GST portal, and enter details such as your username, password, and the captcha code given to you.

Step 2- After logging in to the GST portal, head to Services > Payments> Create Challan.

Step 3- Once you click on ‘Create Challan’, enter the amount of tax you need to pay. To calculate the amount of GST you need to pay, simply calculate your input tax credit and subtract it from your outward tax liability. This process will compute your total GST payment that you need to make. To this amount, add any interest or late fee charges, and deduct the TDS/TCS charges. Once you have added or subtracted these values, you will have arrived at the exact GST tax you are liable to pay.

Once you have calculated the amount and entered the value of GST that you need to pay, select your preferred mode of payment, also known as e-payment. Here, three modes of payment will be made available to you, that is, Internet banking and payment via credit or debit cards, over the counter payment through authorised banks, and payment through NEFT or RTGS. An important point to keep in mind while paying over the counter is that there exists a limit of Rs. 10,000 for every challan.

Step 4- Once you have selected the mode of payment, a summary page containing all the details of your transaction will be generated. Here, select the ‘Mode of Payment’ option, and from there, choose the ‘Over the Counter’ or ‘E-Payment’. Click on ‘E-Payment’ since you are filing your GST taxes online. Then, click on the ‘Make Payment’ option.

Step 5- After you have clicked on ‘Make Payment’, execute your transaction either through net-banking or take a printout of your challan receipt and take it to an authorised bank for the payment. Once the transaction takes place, you will receive a challan which will include all the details of the GST tax paid by you.

In situations where tax return preparers want to create a challan receipt during pre-login, they are required first to declare their Tax Return Preparer Identification Number (TRPID). And in cases where an unregistered business owner or entity wants to generate a challan receipt during pre-login, they are expected to provide their Temporary Identification Number (TMPID).

Important Things to Remember

Business owners and entities must pay their GST taxes on a monthly basis, once they have filed their GSTR 3B return. Before the GST regime, this payment used to coincide with, or was made simultaneously while filing the GSTR 3 return, and has been suspended for the time being.

In case of delayed payments or payments lower than the actual dues, taxpayers are liable to pay a fine of 18 per cent which is charged over and above their tax amount which is due. Hence, it is best to pay taxes on a timely basis so as to avoid fines or late penalties.

Besides being aware of how much GST to pay, dealers need to fill out the following forms that are essential for any GST taxpayer in India:

1. Form GST PMT-01- This form helps maintain the electronic tax liability register.
2. Form GST PMT-02- This form keeps account of the electronic tax ledger.
3. Form GST PMT-03- This form consists of the order of rejection of claims for the refund of balance in the electronic credit ledger or electronic cash ledger and is issued by an authorized officer.
4. Form GST PMT-04- This form is used for communicating any discrepancy in a business entity’s electronic credit ledger.
5. Form GST PMT-05- This form helps to maintain the electronic cash ledger.
6. Form GST PMT-06- This form includes the challan for payment of GST tax, interest, fines, penalties, fees, or any other additional amount excluded in the tax value.
7. Form GST PMT-07- This form is used by businesses or dealers to communicate with their respective banks if the tax amount filed was debited. Still, their corporate identification number (CIN) has either not been generated, or the CIN number has been issued but is not reflecting on the GST online portal.

Conclusion

We hope this article helps you with understanding GST and how to file it, it is elementary, and the ways are quite accessible. If you feel stuck, feel free to reach the helpline number of the government.

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