GST: Documentation, Payment and Returns

Weightage: The closing chapters of ICAI's Paper 3 Section B, roughly 10 of its 50 marks. Where the substantive rules of the earlier chapters become procedure — the paperwork and filings that make the whole system auditable.

Tax Invoice and other documents

Why documentation is load-bearing, not administrative

GST's entire credit chain depends on documents. A recipient's right to input tax credit under section 16(2) requires possession of a tax invoice or debit note; without a valid invoice properly issued, the recipient's credit claim has no foundation regardless of how genuine the underlying transaction is. Documentation in GST is therefore not paperwork layered on top of the substantive law — it is part of the substantive mechanism.

Tax invoice — contents and timing

A registered person supplying taxable goods or services must issue a tax invoice showing the description, quantity, value of goods or services, the tax charged, and other prescribed particulars, including the supplier's and recipient's GSTIN (where registered), the HSN/SAC code, and a serial number.

Timing (developed in the time of supply chapter): before or at the time of removal of goods for supply involving movement, or at delivery for supply not involving movement; for services, within 30 days of the supply (45 days for specified financial sector suppliers).

Bill of supply

Issued instead of a tax invoice by a person supplying exempted goods or services, or by a person paying tax under the composition scheme — since neither may show GST separately on the document, a bill of supply omits the tax amount that a tax invoice would otherwise display.

Debit note and credit note

Debit note: issued by the supplier where the taxable value or tax charged in the original invoice is found to be less than what should have been charged — increasing the recipient's liability/reducing available adjustment in the supplier's favour.

Credit note: issued by the supplier where the taxable value or tax charged in the original invoice is found to be more than what should have been charged, or where goods are returned, or the supply is found deficient. A credit note reduces the supplier's output tax liability, provided it is issued and declared on or before the specified statutory deadline (tied to the return filing timeline for the September following the end of the financial year, or the date of filing the annual return, whichever is earlier) and the recipient has not availed input tax credit on the amount, or if availed, has reversed it correspondingly.

E-way bill

An electronic document required for movement of goods where the consignment value exceeds ₹50,000 (with specified exceptions), generated on the common portal, containing details of the goods, consignor, consignee and transporter, and required to accompany the movement of goods. It exists specifically to allow real-time tracking of goods movement, cross-checked against the supply and payment records the invoice and return system separately generates, closing a gap that documentation alone (which can be generated without actual movement occurring) does not fully address.

Payment of Tax

The three electronic ledgers

Electronic Cash Ledger: reflects deposits made by the taxpayer (through prescribed modes) towards tax, interest, penalty, fee or any other amount payable; debited when a payment is made using cash balance.

Electronic Credit Ledger: reflects eligible input tax credit availed by the registered person; debited when credit is utilised to discharge output tax liability. Credit in this ledger can be used to pay tax only, not interest, penalty, fee or other liabilities, which must be paid from the cash ledger.

Electronic Liability Register: reflects all liabilities of the registered person, whether from returns, an order, or otherwise, against which payments from the cash and credit ledgers are recorded.

Order of utilisation of input tax credit

A specific, mandated sequence governs which type of credit (IGST, CGST, SGST/UTGST) may be used against which type of output liability, and this sequencing is precisely examined because it is not intuitive:

IGST credit must first be fully utilised — against IGST liability, then any remaining balance against CGST liability, then any further remaining balance against SGST/UTGST liability, in that order, before CGST or SGST credit may be used at all.

CGST credit, after IGST credit is exhausted for IGST liability, is utilised against CGST liability, and any remainder against IGST liability — CGST credit can never be used against SGST/UTGST liability.

SGST/UTGST credit is utilised against SGST/UTGST liability, and any remainder against IGST liability — SGST/UTGST credit can never be used against CGST liability.

The cross-utilisation prohibition between CGST and SGST credit — each can offset IGST but never the other's liability directly — exists because CGST and SGST are separate levies collected by separate governments, and allowing direct cross-utilisation would let one government's collected credit discharge the other government's tax, disrupting the revenue split the dual-GST structure is built to preserve.

Returns

The regular return cycle

GSTR-1 — statement of outward supplies, filed by a regular taxpayer, generally monthly (or quarterly under the QRMP scheme for eligible small taxpayers), by the 11th of the following month (monthly filers).

GSTR-3B — a summary return consolidating outward supplies, input tax credit availed, and net tax payable, filed monthly (or quarterly under QRMP), by the 20th of the following month (staggered dates apply for QRMP filers by state group), used to actually discharge tax liability.

GSTR-9 — annual return, consolidating the year's monthly/quarterly filings, due by 31 December following the end of the relevant financial year, mandatory above a specified turnover threshold with relief/exemption below it.

GSTR-9C — reconciliation statement, required for taxpayers above a specified (higher) turnover threshold, reconciling the annual return figures against audited financial statements, self-certified by the taxpayer (the earlier requirement of certification by a chartered accountant has been replaced by self-certification, though a candidate should verify the current position for the applicable year, since this is an area that has changed).

Composition taxpayer returns

A composition taxpayer files a simplified statement (CMP-08), quarterly, for payment of tax, and an annual return (GSTR-4), reflecting the scheme's lighter compliance burden relative to the regular scheme.

Late fee and interest on delayed filing/payment

Late fee for delayed filing of returns accrues at a prescribed daily rate, subject to a maximum cap, and differs (generally lower) for taxpayers with nil liability for the period.

Interest on delayed payment of tax accrues at a prescribed rate (18% per annum for ordinary delayed payment of tax) computed on the tax remaining unpaid, from the day after the due date until the date of payment; a distinct, higher rate (24% per annum) applies specifically to input tax credit wrongly availed and utilised — a deliberately punitive rate reflecting that this is treated as a more serious default than an ordinary payment delay.

First return and final return

A person becoming liable to register must include supplies made from the date liability arose until the date of registration, even though registration itself may be granted somewhat later, in the first return filed after registration.

A person whose registration is cancelled must furnish a final return within a prescribed period from the date of cancellation or the date of the cancellation order, whichever is later, reporting closing stock and any tax payable on it.