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CA Intermediate · Taxation · Payment of Tax

Anand Pvt Ltd, a registered person, has a tax liability of Rs 1,00,000 for a month. Which statement about the electronic cash ledger is correct?

The electronic cash ledger can be used to pay tax, interest, penalty, fee or any other amount payable under the GST law. It is not limited to tax. Also, any unutilised balance can be claimed as refund, so statements denying refund or restricting use are incorrect.

  1. AAmount deposited in the cash ledger can be used to pay tax, interest, penalty, fee or any other amount under the ActCorrect
  2. BAmount in the cash ledger can be used only to pay tax and not interest or penalty
  3. CCash ledger balance can be used to pay tax only after ITC is fully exhausted of the same head, and unused balance cannot ever be refunded
  4. DCash ledger amount can be used only for paying penalty

Explanation

The electronic cash ledger is credited by deposits and may be used for tax, interest, penalty, fees or any other amount payable under the Act. It is not restricted to tax alone, which rules out the second and fourth options. The third option wrongly says refund of unused balance is impossible; a refund can be claimed.

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