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CA Intermediate · Taxation · Payment of Tax

Under the CGST Act, a registered person who has made a deposit of tax in the electronic cash ledger wants to know how the amount can be used. Which is correct?

Amounts in the electronic cash ledger can be used to pay tax, interest, penalty, fee or any other amount payable under the CGST Act and rules, unlike the credit ledger, which can be used only for payment of output tax.

  1. AIt can be used to pay tax, interest, penalty, fee or any other amount under the ActCorrect
  2. BIt can be used to pay only tax and not interest
  3. CIt can be used only to pay interest and late fee
  4. DIt can be used only to pay tax under the reverse charge

Explanation

The electronic cash ledger is credited with deposits and may be used for payment of tax, interest, penalty, fees or any other amount payable under the Act or the rules. Credit ledger, in contrast, can pay only output tax. Hence the other options wrongly restrict the use of the cash ledger.

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