GST Registration, Returns and Payment of Tax

GST compliance runs on three pillars: registration, which brings a supplier into the system; returns, which report supplies and claim credit; and payment, through electronic ledgers that hold cash and credit. This note covers the registration thresholds and compulsory categories, the return cycle, and the rules for payment and interest under the CGST Act, 2017.

1. Registration

Figure 1: Sections 22 to 30

• Threshold, s.22. Every supplier must register in the State from which he makes taxable supplies if his aggregate turnover exceeds Rs 20 lakh (Rs 10 lakh in specified special category States); for exclusive suppliers of goods, the limit has been raised to Rs 40 lakh in most States.
• Aggregate turnover. Includes taxable, exempt, export and inter-State supplies of all persons with the same PAN, but excludes inward supplies taxed on reverse charge.
• Compulsory, s.24. Regardless of turnover: persons making inter-State taxable supplies, casual and non-resident taxable persons, persons liable to reverse charge, e-commerce operators and suppliers through them, input service distributors, and persons required to deduct or collect tax, among others.
• Procedure and cancellation. Registration is PAN based and State wise (s.25); it may be cancelled on application or by the officer for specified defaults, and revocation may be sought (ss.29, 30)

2. Returns

Figure 2: The return cycle

• Outward supplies, s.37. The supplier furnishes details of outward supplies; these are communicated to recipients and form the basis of their credit.
• Return, s.39. Every registered person files a return, monthly or quarterly as applicable, and pays the tax due.
• Annual return, s.44. Filed for each financial year by the prescribed date.
• Late fee, s.47. A fee is payable for late filing of returns.

3. Payment and Interest

Figure 3: Section 49: electronic ledgers

• Cash ledger. Deposits of tax, interest, penalty and fee are credited to the electronic cash ledger and can be used for any payment.
• Credit ledger. Input tax credit sits in the electronic credit ledger and can be used only to pay output tax, in the prescribed order: IGST credit is used first, then CGST and SGST credits, and CGST credit cannot pay SGST or the reverse.
• Interest, s.50. Interest at 18 per cent is payable on tax paid late, calculated on the portion paid in cash; interest also applies where credit is wrongly availed and utilised.

4. Frequently Asked Questions

Must an inter-State supplier register even if turnover is below the threshold?

Ordinarily yes. Section 24 requires persons making inter-State taxable supplies to register regardless of turnover, though notified exemptions exist for certain small service providers and suppliers.

Can CGST credit be used to pay SGST?

No. Credit of CGST cannot be used to pay SGST or UTGST, and SGST credit cannot pay CGST; IGST credit can be used for all three in the prescribed order.

5. Related Topics

• Topic 27: Supply and Levy. Composition scheme.
• Topic 29: Input Tax Credit. Credit conditions.
• Topic 31: Demand, Recovery, Offences and Arrest. Consequences of non-payment.