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Payment of DRC-3 using Electronic Credit Ledger, Goods and Services Tax - GST

Issue Id: - 116882
Dated: 30-11-2020
By:- Preksha Rathod
Payment of DRC-3 using Electronic Credit Ledger

  • Contents

We normally pay DRC-3 using Electronic Cash Ledger only. In what circumstances, DRC-3 can be paid using Electronic Credit Ledger? For Annual return, it is compulsory to make payment through cash. Can we use Credit Ledger for any other DRC-3 payments or Annual return payment?

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Showing Replies 1 to 5 of 5 Records

1 Dated: 1-12-2020

As per Notification No.74/18-CT dated 31.12.18, additional liability of GST is to be paid in cash only through DRC-03.

9. "Towards the end of the return, taxpayers shall be given an option to pay any additional liability declared in this form, through FORM DRC-03. Taxpayers shall select “Annual Return” in the drop down provided in FORM DRC-03. It may be noted that such liability can be paid through electronic cash ledger only.”.

However, in my view if liability has arisen due to ineligible credit, that can be paid through Electronic Credit Ledger. See Column No.10 of serial no.7 of Form GST DRC 03 which indicates that payment through cash or credit is allowed but in view of situation.

2 Dated: 1-12-2020
By:- Ganeshan Kalyani

I agree with the views of Sir Kasturi Sir.

3 Dated: 1-12-2020

Sh.Ganeshan Kalyani Ji,

Thanks a lot for your concurrence on the issue.

4 Dated: 2-12-2020
By:- Alkesh Jani


I also agree with the views of Shri Kasturiji Sir. If we pursue Section 49(4) of CGST and definition of output tax given at 2(86) of the CGST Act, it clearly states that "......on taxable supply of goods or services or both...." means ITC can be utilize for payment of tax only.

Further, I am of the view that Credit can use by DRC-03 in case of refund on pursuing Circular No.125/2019 amended by 135/2020.

5 Dated: 14-12-2020
By:- Kashish Gupta

Dear Preksha

At first, i would like to bring the attention towards section 41 of the CGST Act, 2017 which provides that credit claimed in return shall be provisional in nature and said credit shall be utilised only for payment of self-assessed output tax as per the return. At present, since the matching provisions are deferred, technically the entire credit is provisional in nature but the Board/Government has taken a call not to show the same as provisional on GST portal.

This is quite evident from the below mentioned circulars issued by the Board, -

1. Circular Number 17/17/2017-GST dated 15.11.2017 (Page 9): The refund shall be allowed without making any deduction for provisionally accepted credit.

2. Circular Number 42/16/2018-GST dated 13.04.2018: For payment of arrear of taxes under existing law i.e. pre-GST law, balance lying in electronic credit ledger can be used.

Now, technical reading of the law provides that entire credit is provisional in nature as the same has not been matched u/s 42 and 43 of the Act and can only be utilised only for paying the self-assessed liability. But the circulars issued by Board represents that the credit has been permitted to be used even to pay the demands under pre-GST regime, to refund the accumulated ITC and also to make pre-deposit for filing the appeals.

Then, the question arises why can't the credit be utilised to pay the additional amount paid at the time of filing Annual Return? In my view, we must use the same. Further, reference can be taken from the fact that credit can be utilized to pay the taxes voluntarily under section 73(5) of the Act. If this is accepted situation, will it be justifiable for the taxpayers to pay the additional liability under 'Voluntary tax payment' instead of paying the same under 'Annual Return' option?

Think and decide.

Best Regards

Kashish Gupta


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