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Published on:

September 19, 2025

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Basics of GST

Understanding the GST Payment Process: A Quick Guide

In India, Goods and Services Tax or GST has eased indirect taxation by combining most taxes into one tax. However, for most freelancers, new start-ups, and small business owners, the process of GST payment remains opaque. While submission of GST returns is compulsory, timely and accurate payment is no less critical. Wrong or late payments attract penalties and impact cash flows. This is an easy, step-by-step explanation of the way payment is made under GST, the process, and how businesses can get along with it with ease.

Understanding the GST Payment Process

GST payment is divided into three broad segments - CGST (Central Goods and Services Tax), SGST (State Goods and Services Tax), and IGST (Integrated Goods and Services Tax). GST mode of payment depends on whether the transaction is intra-state or inter-state. GST must be paid every month or quarter by registered taxpayers based on their filing class - either normal scheme or composition scheme.

Online payment of GST is done using the GST portal either by direct debit of bank, UPI, credit/debit card, or NEFT/RTGS or over-the-counter in case of low-value payments. Taxpayers can raise a Challan (Form GST PMT-06) for all the IGST, CGST, SGST, Cess tax heads and pay before filing the returns (GSTR-3B or CMP-08).

For instance, a small manufacturing unit of fashion goods selling within the state for that matter in other states would have to pay SGST and CGST on sales within the state and IGST on sales across states. The system also accommodates the balancing of input tax credit, i.e., firms can settle their GST by balancing what they have already paid on inputs.

Step-by-Step Process for GST Payment

In terms of calculating Tax Liability: Firms are to calculate their tax liability on a monthly or quarterly basis, whichever suits their purchases and sales. It has output tax (sales) and input tax credit (purchases).

Prepare GST Challan (Form PMT-06): Once the net tax payable is determined, a challan is ready. It can be generated on the GST portal. The challan holds good for 15 days from the date of creation.

Select Payment Mode: There are more than one mode through which payment can be made i.e. Internet banking, NEFT/RTGS, UPI, or OTC (for low-value and authorized taxpayers).

Pay Amount: Upon payment, a CIN (Challan Identification Number) is created. This must be noted and verified from the records kept on the GST portal.

Ledger Update: Paid amount is credited to the Electronic Cash Ledger of the assessee, which is utilized for payment of the payable tax while filing the return.

File Return: GSTR-3B or CMP-08 is filed upon payment. Tax liability is settled through available balance in electronic credit ledger as well as cash ledger.

Step-by-step process prevents companies from missing deadlines and incurring penalties, particularly for companies engaged in high value chains like manufacturing or logistics.

Benefits of Understanding the GST Payment Process

Early Compliance: Knowing when and how to pay GST is helpful in timely compliance and no interest or penalty on late payment.

Effective Cash Flow Management: If business organizations know how to utilize their input tax credit, their cash flows will be better controlled and will avoid wasteful expenditure.

Simple Reconciliation: Knowing how payments appear in ledgers makes it easy to reconcile bank statements and GST returns, decreasing accounting inaccuracies.

Enhanced Credibility: A prompt and accurate GST compliance firm leaves a positive impression in the eyes of banks, suppliers, and vendors and can be useful for future alliances or finances.

Audit Preparedness: With all the information regarding each and each step of the payment, your business becomes audit-prepared and possesses all records in their respective place.

Drawbacks and Difficulties

Although the process of GST payments has been made systematic, there are still certain drawbacks that prevail, particularly with small businesses or non-corporate firms.

‍Technical Snags in the Portal: The users sometimes experience problems such as server failure, payment glitches, or challan mismatch.

Arithmetic Sophistication: Businesses which provide intra-as well as inter-state supplies both are confronted with the challenge of appropriately allocating CGST, SGST, and IGST.

Confusion in Ledgers: Most of the small payers get confused with the functioning of electronic cash, credit, and liability ledgers.

Negligence in Understanding ITC Rules: Shortage in translucency for blocked credits and eligibility results in improper tax payment.

All these complexities require easy-to-use tools and expert guidance to make compliance even more easier.

Conclusion

Knowledge regarding the GST payment process keeps enterprises in step, streamlined, and profitable. Whether you are a small business owner, freelancer, or a start-up, there is a requirement to learn how to calculate liabilities, fill challans, and timely payment. There are issues, but they can be best addressed with proper planning and guidance from computer tools, which save time and mechanize daily work. It is good to know the GST payment schedule eventually so that your business remains on track and can concentrate on development.

Call to Action

Fed up with keeping track of your GST payments and challans? Swipes' GST Filing Software offers automated challan generation, real-time tax calculation, and smart ledger matching to help small businesses and freelancers become GST compliant with ease. Steer clear of manual errors, get timely reminders, and file confidently.

Learn More About Swipes GST Filing Software

FAQs

1. Do I have to pay the GST if I did not make any sales for the month?

Yes, even though you did not have any sales, if you are a registered taxpayer, you are still required to file your returns and late fees or interest, if applicable.

2. Can I pay some amount of the GST and subsequently file the return?

No, the full amount has to be paid in advance while filing the return. It will not permit you to file the return unless you pay the liability in full.

3. I have been credited to my bank account but why is the payment not reflected on the GST portal?

Either you can contact your bank or file a grievance on the GST portal using the Challan Reference Number (CRN).

4. Do I need to make the payment of GST using only a business bank account?

Yes, it would be better if you pay via your business name-registered bank account so that it will become clear and reconcilable in case of audit or taxation.

5. How do I earn credit for payment to the government?

After successful payment, CIN is created and the amount will be credited to your electronic cash ledger on the portal. You can save and retain a copy of receipt of challan as evidence.

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