Indirect Tax Laws · Payment of Tax

Payment of Tax in Instalments under Rule 158 of the CGST Rules

Updated 5 October 2026 · Fact-checked

Rule 158 of the CGST Rules, 2017 lets a taxable person ask the Commissioner to allow payment of tax and other dues in monthly instalments, up to 24, where financial hardship leaves the person unable to pay the amount due at once. You apply electronically in FORM GST DRC-20. The Commissioner may allow instalments by an order in FORM GST DRC-21. Interest applies, and one default makes the whole balance due.

Understand Payment of Tax in Instalments under Rule 158

GST is due by a fixed date. Sometimes a business cannot pay a large amount in one go, for example when the tax declared in its returns is large and cash is short. Section 80 of the CGST Act lets the Commissioner, on the taxable person's request and on being satisfied that payment of the amount due would cause financial hardship, extend the time for payment or allow payment in monthly instalments, not exceeding 24. The ground is financial hardship: the person is unable to pay the amount due. Rule 158 gives the procedure.

Think of it as a request, not a right. You apply, you state your financial hardship and the reasons for your inability to pay, and the Commissioner decides. On the application, the Commissioner may call for a report from the jurisdictional officer. After considering the report, the Commissioner may allow payment in monthly instalments (not exceeding 24) by an order in FORM GST DRC-21, subject to conditions. The request can also be rejected.

The facility is not meant for every amount. After the 2023 amendment, section 80 does not permit instalments for amounts payable under sections 62, 63, 64, 67, 73, 74, 129 and 130. So an amount demanded by an order under section 73 or 74 cannot be paid in instalments. Do not write that self-assessed tax is the excluded amount. That exclusion belongs only to the pre-amendment text. Read the statute and the rule for any other limits before you advise.

The facility has a cost and a risk. Interest under section 50 (18% per annum) is payable on the amount of tax that remains unpaid, for the period of delay. As you pay instalments, the unpaid amount falls and so does the interest. If you miss even one instalment on its due date, the entire outstanding balance falls due at once and becomes liable to recovery. This default consequence is provided in section 80, and Rule 158 gives the procedure.

For the exam, think in three stages: application (FORM GST DRC-20, electronic, with grounds), order (FORM GST DRC-21, allowing or rejecting), and consequences (interest, then default and recovery). A case question usually tests one of these stages with facts like a missed instalment, a request for more than 24 months, or dues arising under an excluded section.

Key rules to remember

Maximum number of instalments: Instalments ≤ 24 monthly instalments; The Commissioner may allow fewer. Anything beyond 24 months cannot be allowed.
Excluded amounts: No instalments for amounts payable under sections 62, 63, 64, 67, 73, 74, 129 and 130 (section 80 as amended w.e.f. 1 Oct 2023); A demand under section 73 or 74 therefore cannot be paid in instalments. Check the source of the dues first.
Application: Electronic application in FORM GST DRC-20 to the Commissioner; State the amount, the ground (financial hardship, with the reasons for your inability to pay) and the instalments you want.
Order: Order in FORM GST DRC-21 allowing payment in instalments, subject to conditions, or rejecting the request; The Commissioner may call for a report from the jurisdictional officer and, after considering that report, may allow instalments by the order.
Interest: Interest under section 50 (18% p.a.) on the outstanding amount of tax, for the period it remains unpaid; Instalments do not stop interest. The facility is not interest-free. The outstanding amount reduces as each instalment is paid, so the interest on it reduces too.
Default rule: Default in any one instalment ⇒ entire outstanding balance due forthwith; The balance then becomes liable to recovery. This consequence is provided in section 80, and Rule 158 gives the procedure.
Legal source: Section 80 of the CGST Act (power) + Rule 158 of the CGST Rules (procedure); Quote both when answering in provision-facts-conclusion form.

How to solve Payment of Tax in Instalments under Rule 158 questions

Use this order for any question on instalment payment of GST dues. It keeps your answer in provision-facts-conclusion form.

1Identify the dues: tax or other amount, the amount, the section under which it is payable, and why the person cannot pay at once.
2State the provision: section 80 of the CGST Act gives the power, where the person is unable to pay the amount due because of financial hardship, and Rule 158 gives the procedure. Note that after the 2023 amendment, instalments are not permitted for amounts payable under sections 62, 63, 64, 67, 73, 74, 129 and 130.
3Check the application: electronic, in FORM GST DRC-20, to the Commissioner, stating the financial hardship, the reasons for inability to pay, and the proposed schedule.
4Check the request: is the number of instalments within 24 monthly instalments? If it exceeds 24, the request cannot be allowed as made.
5Describe the decision: the Commissioner may call for a report from the jurisdictional officer and, after considering the report, may allow payment in monthly instalments (not exceeding 24) by an order in FORM GST DRC-21, subject to conditions. The request may also be rejected.
6Add interest: interest under section 50 applies on the outstanding amount of tax for the period it remains unpaid. It reduces as instalments are paid. Compute it on the reducing balance if figures and dates are given.
7Apply the default rule: if any instalment is missed on its due date, the whole outstanding balance becomes due forthwith and is liable to recovery.
8Conclude clearly: say whether the request is valid, what the person must do, and the consequence.

Quickest way: Three-line recall for Rule 158

When to use it: Use this for short MCQs and for opening a descriptive answer when time is tight.

Apply: DRC-20, electronic, to the Commissioner, on financial hardship and inability to pay.
Order: DRC-21, up to 24 monthly instalments, after the Commissioner considers any report called for.
Cost and risk: interest under section 50 on the outstanding amount, and one default makes the full balance due at once.

Common mistakes in Payment of Tax in Instalments under Rule 158

Treating instalment payment as the taxpayer's right.
The word 'facility' makes students think it is automatic.
Fix: Write that the Commissioner may allow it on your request, only on being satisfied that payment would cause financial hardship. The request can also be rejected.
Saying interest is waived during the instalment period.
Students link instalments with relief and assume no interest.
Fix: State that interest under section 50 is payable on the outstanding amount of tax, in addition to the instalments.
Allowing more than 24 instalments or quarterly instalments.
Students mix this with other schemes or invent a longer period.
Fix: Remember the limit: monthly instalments, not exceeding 24.
Saying only the missed instalment becomes due on default.
It seems fair that only the defaulted amount should be recovered.
Fix: On default in any one instalment, the whole outstanding balance falls due forthwith and becomes liable to recovery.
Mixing up FORM GST DRC-20 and FORM GST DRC-21.
The form numbers look similar and are learnt as a list.
Fix: DRC-20 is the taxpayer's application. DRC-21 is the order. Link 20 with 'ask' and 21 with 'decision'.
Ignoring the Commissioner and the jurisdictional officer's report when describing who decides.
Students write 'proper officer' as the decision-maker without reading the rule.
Fix: Section 80 and Rule 158 place the power with the Commissioner. The Commissioner may call for a report from the jurisdictional officer and the order follows after considering it. Describe this sequence and do not name some other authority.
Using the ground 'extraordinary circumstances'.
Students assume a calamity-type ground applies, as in some other relief provisions.
Fix: The ground is financial hardship, shown by stating the reasons for your inability to pay the amount due.

Worked examples

Example 1

Sunrise Traders, a registered person, has GST of ₹12,00,000 declared in its returns but unpaid. It cannot pay at once because of financial hardship after losing a major customer. The dues do not arise under any of the sections excluded from the facility. It wants to pay in 24 equal monthly instalments. Advise on the procedure and, purely for illustration, show interest at 18% per annum on the outstanding balance for the first two months. Assume the entire ₹12,00,000 is tax, the instalments are of principal only, the first instalment is paid at the end of month one, and interest is counted only from the start of the schedule.

Show the solution

Provision: section 80 of the CGST Act allows the Commissioner, on the taxable person's request and on being satisfied that payment would cause financial hardship, to permit payment in monthly instalments, up to 24. Rule 158 prescribes the procedure.
Exclusion check: the facility is not available for amounts payable under sections 62, 63, 64, 67, 73, 74, 129 and 130. Here the dues are declared in the returns and do not arise under those sections, so they are not excluded. If the same amount were demanded under section 73 or 74, instalments could not be allowed.
Application: Sunrise must file an electronic application in FORM GST DRC-20 to the Commissioner. It must state the amount, its financial hardship, the reasons for its inability to pay and the schedule it wants.
Request check: 24 monthly instalments is within the maximum, so the request is valid in form.
Decision: the Commissioner may call for a report from the jurisdictional officer and, after considering the report, may allow instalments by an order in FORM GST DRC-21, subject to conditions.
Assumption: we treat the whole ₹12,00,000 as tax, because section 50 interest applies only to unpaid tax and not to interest, penalty or other dues.
Instalment amount if allowed: ₹12,00,000 ÷ 24 = ₹50,000 per month.
Illustrative interest for month 1 on the outstanding ₹12,00,000: ₹12,00,000 × 18% × 1/12 = ₹18,000.
After the first instalment, the outstanding balance is ₹12,00,000 − ₹50,000 = ₹11,50,000. Illustrative interest for month 2: ₹11,50,000 × 18% × 1/12 = ₹17,250. Interest falls as the balance falls.
This is only an illustration. Actual section 50 interest runs on the unpaid tax from the original due date of payment, not from the start of the instalment schedule. So the actual interest depends on the original due date, the payment dates and the order.

Answer: Sunrise should apply in FORM GST DRC-20. The dues are not under an excluded section, so the facility can be considered. If the Commissioner allows it in FORM GST DRC-21, the principal instalment is ₹50,000 a month. On the assumption that the whole ₹12,00,000 is tax and interest is counted from the start of the schedule, illustrative interest is ₹18,000 for month 1 on ₹12,00,000 and ₹17,250 for month 2 on ₹11,50,000. It reduces as the balance reduces. Actual interest under section 50 runs from the original due date and depends on the order.

Example 2

Meena Industries was allowed 12 equal monthly instalments of ₹50,000 each against a ₹6,00,000 liability that does not arise under any excluded section. It paid the first four instalments on time but missed the fifth. Explain the consequence and the amount that becomes due.

Show the solution

Provision: under section 80 and Rule 158, if there is default in payment of any one instalment on its due date, the whole outstanding balance becomes due and payable forthwith.
Total check: 12 × ₹50,000 = ₹6,00,000.
Instalments paid: 4 × ₹50,000 = ₹2,00,000.
Outstanding balance: ₹6,00,000 − ₹2,00,000 = ₹4,00,000. This is 8 instalments of ₹50,000, including the missed one.
Effect: the entire ₹4,00,000 becomes due on the default, not just the missed ₹50,000. This follows section 80, with Rule 158 giving the procedure.
Recovery: the whole balance of ₹4,00,000 now becomes liable to recovery.
Interest: since the whole balance is now due, interest under section 50 is payable on the tax in that unpaid balance for the period it remains unpaid.

Answer: The whole outstanding balance of ₹4,00,000 becomes due at once under section 80 and Rule 158, with interest under section 50 on the unpaid tax. It becomes liable to recovery.

Exam tips

Write the section 80 power and the Rule 158 procedure together. Examiners reward naming both.
Memorise the numbers: 24 monthly instalments, DRC-20 for application, DRC-21 for order.
Use the right ground: financial hardship and inability to pay. Never write 'extraordinary circumstances'.
In case scenarios, check the facts for a missed instalment. That usually signals the acceleration (whole balance due) rule.
Check the exclusions: after the 2023 amendment, section 80 does not allow instalments for amounts payable under sections 62, 63, 64, 67, 73, 74, 129 and 130. A demand order under section 73 or 74 is therefore outside the facility.
In MCQs, watch for options that say 'interest-free' or 'automatic'. Both are wrong.

Practice questions from Payment of Tax

Payment of Tax in Instalments under Rule 158 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 in Instalments under Rule 158: frequently asked questions

Who decides a request for payment of GST in instalments under Rule 158?

The Commissioner is the authority under section 80 and Rule 158. On the application, the Commissioner may call for a report from the jurisdictional officer. After considering the report, the Commissioner may allow payment in monthly instalments, not exceeding 24, by an order in FORM GST DRC-21, subject to conditions.

How many instalments can be allowed under Rule 158?

Up to 24 monthly instalments. The Commissioner may allow fewer, depending on the facts of the case.

Is interest payable when tax is paid in instalments?

Yes. Interest under section 50 is payable on the outstanding amount of tax for the period it remains unpaid. As you pay instalments the outstanding amount falls, so the interest on it falls. Instalments only spread the payment. They do not remove the interest cost.

What happens if I miss one instalment?

The whole outstanding balance becomes due and payable forthwith. It then becomes liable to recovery. This consequence is provided in section 80, and Rule 158 gives the procedure.

Which form do I file to apply for instalments?

You file an electronic application in FORM GST DRC-20, stating your financial hardship and the reasons for your inability to pay. The order comes in FORM GST DRC-21.