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CA Intermediate · Taxation · Payment of Tax

Sundaram Traders, a registered person in Chennai, has a positive balance of Rs 40,000 in its electronic cash ledger and Rs 25,000 in its electronic credit ledger (IGST). It wants to use the credit ledger balance to pay a liability. Which of the following dues can be paid using the electronic credit ledger?

The electronic credit ledger can be used only for paying output tax liability. Interest, late fee, penalty and similar amounts must be paid in cash through the electronic cash ledger, so only the output CGST liability for the month can be paid from the credit ledger.

  1. AInterest on delayed payment of tax
  2. BLate fee for delayed filing of return
  3. COutput CGST liability for the monthCorrect
  4. DPenalty imposed under an adjudication order

Explanation

The electronic credit ledger can be used only to pay output tax (CGST, SGST/UTGST, IGST, cess as per the permitted order). Interest, late fee, penalty and other dues can be paid only through the electronic cash ledger. Hence only the output tax liability can be discharged from the credit ledger.

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