Skip to content

CA Intermediate · Taxation · Payment of Tax

Kavya Textiles, a registered person, has a net cash-payable tax liability for a month. Which of the following statements about the electronic cash ledger is correct under the CGST Act?

Money in the electronic cash ledger can be used to pay tax, interest, penalty, fees or any other amount payable under the Act. It is not limited to tax. The electronic credit ledger, however, can be used only for paying output tax.

  1. AAmount in the cash ledger can be used to pay tax, interest, penalty, fees or any other amount payable under the ActCorrect
  2. BAmount in the cash ledger can be used only to pay tax, not interest or penalty
  3. CAmount in the cash ledger can be used to pay tax and interest but never penalty
  4. DAmount in the cash ledger can never be refunded to the person

Explanation

The electronic cash ledger is credited on deposit and can be used for tax, interest, penalty, fees or any other amount payable. Any balance can be claimed as refund as per law, so the last option is wrong. The ITC ledger, by contrast, can be used only for payment of output tax.

Did you get it right without looking?

One question tells you little. A timed set on Payment of Tax shows your real accuracy, how long you take and where you lose marks.

Practise Payment of TaxFree diagnostic mock

More Payment of Tax questions