CA Final · Indirect Tax Laws

Payment of Tax for CA Final Indirect Tax Laws: Instalments under Rule 158

Payment in instalments lets a taxable person ask the Commissioner to allow an amount due under a notice or order to be paid in monthly instalments, where extraordinary circumstances make one-go payment impossible. Apply in FORM GST DRC-20. The order (DRC-18 allows, DRC-19 rejects) fixes the number of instalments, up to 24. Interest applies; default makes the balance due.

What this chapter covers

This chapter deals with one relief: paying a tax demand in monthly instalments instead of in one payment. The rule is Rule 158 of the CGST Rules, 2017, which works with Section 80 of the CGST Act, 2017. Under Section 80, the Commissioner may, on the taxable person's request and for reasons recorded in writing, allow an amount due under a notice or order (for example, a demand under Section 73 or 74) to be paid in instalments where extraordinary circumstances make payment in one go impossible. The chapter is short, but it is rule-heavy. Every step has a condition: who can apply, for which dues, how, what the order says, and what happens if you miss a payment.

The chapter has three parts. First, the mechanism: the application in FORM GST DRC-20, the Commissioner's examination and the order. Second, the money and the consequences: the order fixes the number of monthly instalments, up to a maximum of 24, in the Commissioner's discretion; interest is payable under Section 50(1) at the notified rate (currently 18% a year) on the amount payable in instalments; and there are consequences on default. Third, the limits: the facility does not apply to amounts collected as tax or self-assessed in returns (the liability declared in GSTR-3B or GSTR-1), and how to apply all this to a case.

It connects to the rest of Paper 5 through demand and recovery, interest, and the return-filing and payment cycle. A question may begin with a demand order or a notice, then ask whether instalments are possible and what follows. So read this chapter together with your notes on liability declared in returns, interest and recovery.

The chapter is small and its rules are fixed, so it is one of the easier places to score full marks in the GST part. It suits case-scenario MCQs, because one fact (for example, the dues arise from a self-declared return liability, or one instalment was missed) decides the answer. It also suits short written answers in provision-facts-conclusion form. If you learn the conditions exactly, you can answer quickly and leave more time for the heavier chapters.

Payment of Tax: topics in the order to study them

1Payment of Tax in Instalments under Rule 158Start here to learn the basic scheme: who applies, how, and what the Commissioner does with the request.
2Instalment Order, Interest and Default ConsequencesStudy this next, because it builds on the application and covers the order, the number of instalments, interest and the effect of default.
3Instalment Facility: Exclusions and Practical ApplicationFinish with the limits and case practice, since you need the full scheme in mind to spot what is excluded and to apply it to facts.

How to prepare Payment of Tax

Treat this chapter as a short checklist you can run on any fact pattern. Learn the sequence once, then practise applying it to small cases.

Read the text of Rule 158 and Section 80 CGST Act slowly, and note each condition in your own words. Keep a one-page flow: request, examination, order, payment, default.
Note the eligibility condition first: the taxable person must request the facility for an amount due under a notice or order (for example, a demand under Section 73 or 74), and the Commissioner must find that extraordinary circumstances make payment in one go impossible, recording reasons in writing.
Write down the exclusion as a separate item: amounts collected as tax or self-assessed in returns (the liability declared in GSTR-3B or GSTR-1) are outside the facility.
Note the fixed numbers and forms: the order specifies the number of monthly instalments, up to a maximum of 24, in the Commissioner's discretion; apply in FORM GST DRC-20; the order allowing the request is in FORM GST DRC-18 and the order rejecting it is in FORM GST DRC-19.
Link the chapter to interest. Instalment permission does not remove the interest liability. Interest at the rate notified under Section 50(1) (currently 18% a year) is payable on the amount payable in instalments, as per the order. Do not state a start date such as 'the date of the order' unless the rule text says so.
Memorise the default rule: if any instalment is missed on its due date, the whole outstanding balance becomes due and payable at once, is recoverable without any further notice, and carries interest at the rate notified under Section 50(1) until it is paid.
Practise five or six short case scenarios. For each one, write the answer as provision, facts, conclusion in three or four lines.
On the last day, revise only your checklist, the forms and the exclusion, and attempt a few MCQs on them.

Common mistakes in Payment of Tax

Treating the facility as available for every kind of due, or without any request and inability to pay, including tax already declared in returns.
Fix: Before using the facility in an answer, check that there is a request, a notice or order, and extraordinary circumstances. Then check the source of the dues. If they are the liability declared in GSTR-3B or GSTR-1, say the facility is not available.
Saying that interest is waived once instalments are allowed.
Fix: State clearly that instalment permission only spreads the payment. Interest at the rate notified under Section 50(1) (currently 18% a year) remains payable on the amount payable in instalments, as per the order.
Stating the default consequence loosely, such as 'only that instalment is recoverable' or 'recovered without further notice' and nothing more.
Fix: Write that on default of any one instalment, the entire outstanding balance becomes due and payable at once, is recoverable without further notice, and carries interest at the rate notified under Section 50(1) until payment.
Skipping the procedure and jumping straight to payment, or attributing the decision to 'the tax authority' in general.
Fix: Always mention the request in FORM GST DRC-20, the Commissioner's possible report and hearing, and the order in DRC-18 (allowing) or DRC-19 (rejecting). Many MCQs test exactly this order.
Giving wrong numbers, such as the wrong maximum number of instalments, or quoting section numbers from memory.
Fix: Learn the numbers from the current rule text: Section 80 and Rule 158, a maximum of 24 monthly instalments, with the number fixed in the order. If you are not sure of any other section number, refer to the provision by name and write the rule in words.

Last-day revision: Payment of Tax

The Commissioner may, on the taxable person's request and for reasons recorded in writing, allow an amount due under a notice or order to be paid in instalments where extraordinary circumstances make payment in one go impossible (Section 80 CGST Act).
The order specifies the number of monthly instalments, up to a maximum of 24, in the Commissioner's discretion.
You apply electronically on the common portal in FORM GST DRC-20.
The Commissioner may call for a report and may give you a chance to be heard before passing the order.
The order either allows the request in FORM GST DRC-18 or rejects it in FORM GST DRC-19.
Interest at the rate notified under Section 50(1) (currently 18% a year) is payable on the amount payable in instalments, as per the order. Instalment permission does not waive it.
If you default on any one instalment on its due date, the whole outstanding balance becomes due and payable at once.
After such default, the balance is recoverable without any further notice, and interest at the notified Section 50(1) rate continues until payment.
Amounts collected as tax or self-assessed in returns (the declared liability in GSTR-3B or GSTR-1) are not eligible for the facility.
In a case question, check eligibility first, then the order, then interest, then default.
Write answers in provision, facts, conclusion form.

Payment of Tax practice questions

Payment of Tax in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Payment of Tax: frequently asked questions

How many instalments can I get under Rule 158?

The facility allows payment in monthly instalments, up to a maximum of 24. The number is fixed in the Commissioner's order (FORM GST DRC-18) in his discretion, so you may get fewer. It is available only on your request, for an amount due under a notice or order, and where extraordinary circumstances make payment in one go impossible.

Do I still pay interest if my request for instalments is allowed?

Yes. Allowing instalments only extends the time for payment. Interest at the rate notified under Section 50(1) (currently 18% a year) stays payable on the amount payable in instalments, as per the order, so include it in your working and your answer.

What happens if I miss one instalment?

The whole outstanding balance becomes due and payable at once. It can then be recovered without any further notice, and interest at the notified Section 50(1) rate continues until payment. A single default ends the benefit of the facility.

Can I pay the tax shown in my filed return in instalments?

No. The facility does not cover amounts collected as tax or self-assessed in returns, that is, the liability declared in GSTR-3B or GSTR-1. In exam cases, always check where the dues come from before applying the facility.