Taxation · Payment of Tax

Payment of Tax under GST: Electronic Ledgers

Updated 4 October 2026 · Fact-checked

Under GST, every registered person has three electronic records on the common portal. The cash ledger holds money you deposit and pays any dues. The credit ledger holds input tax credit and pays only output tax. The liability register records what you owe. To solve questions, fix the liability, apply credit, then pay the balance in cash.

Understand Payment of Tax under GST: Electronic Ledgers

GST payment runs through the common portal. You do not pay tax straight into a bank account at the time of filing. Instead the portal keeps three electronic records for each registered person. Section 49 of the CGST Act, 2017 and Rules 85 to 87 of the CGST Rules govern them.

The electronic cash ledger (Form GST PMT-05) holds money you deposit. You deposit by generating a challan on the portal and paying by internet banking, credit or debit card, NEFT, RTGS or over the counter through an authorised bank (subject to the over-the-counter limit in the Rules). The amount is credited to the ledger once the bank confirms payment. It is kept under separate heads: IGST, CGST, SGST/UTGST and Cess, each split into tax, interest, penalty, fee and others. Cash can pay tax, interest, penalty, fee or any other amount.

The electronic credit ledger (Form GST PMT-02) holds input tax credit (ITC). ITC is credited as self-assessed and claimed in your return (GSTR-3B). It is kept under IGST, CGST, SGST/UTGST and Cess. The key limit: credit can be used only to pay output tax under the CGST/IGST Acts. It cannot pay interest, penalty, late fee or any other amount. Only cash can do that.

The electronic liability register (Form GST PMT-01) records what you owe. It is debited when you file a return showing a liability, or when a demand, interest or penalty arises. It is credited when you discharge the liability by debiting the cash or credit ledger. Think of it as the scoreboard. Cash and credit ledgers are the two wallets you pay from.

The order of use matters. IGST credit is used first for IGST, then the balance for CGST and SGST/UTGST in any order. CGST credit is used for CGST, then IGST. SGST/UTGST credit is used for SGST/UTGST, then IGST. CGST credit can never pay SGST/UTGST and vice versa. Cess credit pays only cess. Also, you can claim refund of the balance in the cash ledger by an application, subject to the law.

Key rules to remember

Cash ledger (PMT-05): Credit: deposit via challan | Debit: payment of tax, interest, penalty, fee, others; Can pay any amount due under the Act. Balance can be claimed as refund by application.
Credit ledger (PMT-02): Credit: ITC claimed in return | Debit: payment of output tax only; Cannot pay interest, penalty, late fee or fee. Also debited if ITC is claimed as refund or reversed.
Liability register (PMT-01): Debit: amount payable | Credit: amount paid; Debited by the return, demand, interest or penalty. Credited on payment from cash or credit ledger.
Order of use of IGST credit: IGST → CGST and SGST/UTGST (in any order, after IGST is exhausted); IGST credit must be fully used for IGST before it is used for CGST or SGST.
Order of use of CGST and SGST credit: CGST credit: CGST, then IGST | SGST/UTGST credit: SGST/UTGST, then IGST | CGST ↔ SGST not allowed; Cross-use between CGST and SGST/UTGST is barred.
Net cash payable (when no restriction bites): Cash = Total output tax − ITC utilised; Use the head-wise rules first. The total is a check on your working.
Challan references: CPIN (14 digits, generated on portal) → CIN (17 digits, given by bank on payment); Challan is valid for 15 days. The ledger is credited when the bank confirms the CIN.

How to solve Payment of Tax under GST: Electronic Ledgers questions

Use this sequence for any numerical or theory question on GST ledgers.

1Identify which ledger the question asks about: cash, credit or liability register. Note the form number if the question names it.
2List the liability head-wise: IGST, CGST, SGST/UTGST and Cess. Split into tax, interest, penalty and fee. Interest, penalty and fee can be paid only in cash.
3List the ITC balance head-wise from the credit ledger.
4Apply credit in the permitted order: IGST credit to IGST first, then CGST/SGST; CGST credit to CGST then IGST; SGST credit to SGST then IGST. Never set CGST credit against SGST.
5Compute the balance output tax in each head. That balance, plus all interest, penalty and fee, must be paid in cash.
6Compare with the cash ledger balance. If it is short, state the deposit needed via challan (PMT-06, CPIN, CIN).
7Write the closing balances of the three records: liability register (nil if fully paid), credit ledger and cash ledger.
8For theory answers, use provision, application, conclusion. Name the ledger, state what it is credited and debited with, and state the conclusion.

Quickest way: Head-wise grid and MCQ elimination

When to use it: Use under time pressure for numerical questions and for the 1 or 2 mark MCQs. Written answers still need visible steps.

Draw a three-line grid: IGST, CGST, SGST. Write liability and credit side by side.
Set IGST credit against IGST first. Leftover IGST credit may be applied to CGST and SGST in any order. Total cash is the same either way. The order only changes the head-wise cash, so follow the question's direction if it gives one.
Use CGST credit on CGST and SGST credit on SGST. Use leftover credit only against IGST.
Check the total: cash payable = total liability − total credit used. If your head-wise cash does not add to this, you have an error.
MCQ trick: reject any option that lets credit pay interest, penalty or late fee. Reject any option that sets CGST credit against SGST or the reverse.
In written answers, show the grid, a line for each set-off and the closing balances. Step marks are given for method even if the final figure slips.

Common mistakes in Payment of Tax under GST: Electronic Ledgers

Using ITC to pay interest, penalty or late fee.
Students treat the credit ledger as general money.
Fix: Remember: credit ledger pays output tax only. Interest, penalty, fee and other amounts need cash.
Setting CGST credit against SGST/UTGST liability (or the reverse).
Both are 'State-level' taxes in the student's mind, so they feel interchangeable.
Fix: CGST and SGST are separate. Only IGST credit can move across to both. CGST and SGST credit may meet IGST only after their own head.
Using CGST or SGST credit before IGST credit is exhausted against IGST liability, or using IGST credit for CGST first.
Students apply credit in any order to reach the answer quickly.
Fix: IGST credit must be used for IGST first. Only the leftover goes to CGST and SGST, in any order. The order does not change total cash, only the head-wise split.
Confusing the liability register with the cash ledger.
Both show amounts and both change when you file or pay.
Fix: Liability register shows what you owe. Cash ledger shows money you have deposited. Payment moves entries in both.
Thinking tax is paid on generating the challan.
Students stop at the CPIN stage.
Fix: CPIN is generated on the portal. Payment is complete only when the bank issues the CIN and the amount is credited to the cash ledger. The CPIN is valid for 15 days.
Treating the cash ledger as a single pool.
Students see one 'cash balance' on paper.
Fix: Cash is kept head-wise (IGST, CGST, SGST/UTGST, Cess and tax, interest, penalty, fee, others). Deposit under the correct head.

Worked examples

Example 1

For a month, Rohan Traders (a registered person) has output tax liability of IGST ₹40,000, CGST ₹90,000 and SGST ₹90,000. Its credit ledger shows IGST ₹60,000, CGST ₹30,000 and SGST ₹20,000. Compute the cash payable head-wise, using the leftover IGST credit against SGST.

Show the solution

Total liability = 40,000 + 90,000 + 90,000 = ₹2,20,000. Total ITC = 60,000 + 30,000 + 20,000 = ₹1,10,000.
IGST credit of ₹60,000 is used first against IGST liability of ₹40,000. IGST liability becomes nil. Leftover IGST credit = ₹20,000.
Leftover IGST credit of ₹20,000 is used against SGST. SGST liability becomes 90,000 − 20,000 = ₹70,000.
CGST credit of ₹30,000 is used against CGST liability. CGST balance = 90,000 − 30,000 = ₹60,000.
SGST credit of ₹20,000 is used against SGST. SGST balance = 70,000 − 20,000 = ₹50,000.
Cash payable: IGST nil + CGST ₹60,000 + SGST ₹50,000 = ₹1,10,000.
Check: total liability ₹2,20,000 − total credit ₹1,10,000 = ₹1,10,000. This matches.

Answer: Cash payable is ₹1,10,000 (CGST ₹60,000 and SGST ₹50,000). If the leftover IGST credit were used against CGST instead, cash would be CGST ₹40,000 and SGST ₹70,000, still ₹1,10,000 in total.

Example 2

Meera Enterprises has an unpaid CGST liability of ₹25,000 and interest on delayed payment of ₹1,200 (CGST head) in its electronic liability register. Its CGST credit ledger balance is ₹1,00,000. Its cash ledger balance is nil. Explain how the liability is discharged and the ledger position after payment.

Show the solution

Tax of ₹25,000 is output tax. It can be paid by debiting the electronic credit ledger, so ₹25,000 of CGST credit is utilised.
Interest of ₹1,200 cannot be paid from the credit ledger. It must be paid from the cash ledger.
The cash ledger is nil. Meera generates a challan on the common portal for ₹1,200 under the CGST interest head. The portal gives a CPIN.
She pays the challan within its validity (15 days) by internet banking, card, NEFT or RTGS. The bank issues a CIN, and the cash ledger is credited with ₹1,200 under CGST interest.
She then debits ₹1,200 from the cash ledger to pay the interest.
Each payment is credited to the liability register, which now shows nil for both items.
Closing balances: CGST credit = 1,00,000 − 25,000 = ₹75,000. Cash ledger (CGST interest head) = nil. Liability register = nil.

Answer: Tax ₹25,000 is paid from the credit ledger and interest ₹1,200 is paid in cash via challan (CPIN then CIN). Closing CGST credit is ₹75,000. Cash ledger and liability register are nil.

Exam tips

Always state that credit ledger pays output tax only. This one line is a frequent MCQ and a mark-earner in theory answers.
Memorise the order of set-off table: IGST credit to IGST, CGST, SGST; CGST credit to CGST, IGST; SGST credit to SGST, IGST; no CGST-SGST cross-use.
Draw the head-wise grid and check the total cash against total liability minus total credit.
Know the difference in one line each: cash ledger = deposits (PMT-05); credit ledger = ITC (PMT-02); liability register = dues (PMT-01).
For process questions, write the sequence: challan, CPIN, payment, CIN, credit to cash ledger.

Practice questions from Payment of Tax

Payment of Tax under GST: Electronic Ledgers 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 under GST: Electronic Ledgers: frequently asked questions

What is the difference between the electronic cash ledger and the electronic credit ledger?

The cash ledger holds money you deposit through a challan. It can pay tax, interest, penalty, fee or any other amount. The credit ledger holds input tax credit claimed in your return. It can pay only output tax.

What is the electronic liability register in GST?

It is a record of everything a registered person owes under GST. It is debited when a return shows tax payable, or when interest, penalty or a demand arises. It is credited when you pay from the cash or credit ledger.

What are CPIN and CIN in GST payment?

CPIN is the Common Portal Identification Number given when you generate a challan on the GST portal. CIN is the Challan Identification Number given by the bank once payment is made. The cash ledger is credited when the bank confirms the CIN.

Can I use ITC to pay interest or late fee?

No. Input tax credit can only pay output tax. Interest, penalty, late fee and other amounts must be paid from the electronic cash ledger.

Can CGST credit be used to pay SGST?

No. CGST credit can pay CGST and then IGST. SGST/UTGST credit can pay SGST/UTGST and then IGST. IGST credit can be used for IGST first, then for CGST and SGST/UTGST in any order.