Two sides of GST money management often cause confusion: paying what you owe, and getting back what you've overpaid or accumulated. Both happen on the GST portal but follow different mechanics and timelines. Here's how payments and refunds work so you can manage your cash flow with confidence.
Reviewed by CA Harika Chebolu, FCA · Last updated 2026-06-15
Quick answer
Paying GST and claiming refunds both run through the portal, but they work differently. Here's how the cash and credit ledgers, payments, and refund claims fit together.
Your GST liability is settled using a combination of input tax credit and cash. The portal maintains separate electronic ledgers: a credit ledger for the input tax credit available to you, and a cash ledger for amounts you deposit. When you file, eligible credit is set off first against your output tax, and any remaining balance is paid in cash. Understanding this order matters, because it determines how much actual cash you need to part with each period.
To pay in cash, you generate a challan on the portal and remit the amount, which then sits in your electronic cash ledger ready to be used against your liability. Some taxes — such as those under reverse charge — must be paid in cash and cannot be set off using credit. Plan the timing so the cash is in the ledger before your liability falls due, because the payment is only treated as made once it reaches the ledger, not when you initiate the transfer.
If tax is paid after its due date, interest applies on the outstanding amount at the prescribed annual rate, running from the day after the due date until the tax is actually paid. Interest is a statutory charge, so it accrues regardless of intent or reason for delay. The practical takeaway is to prioritise the tax payment even if some other part of the filing is still being finalised, since delaying the cash payment is what triggers the interest clock.
Refunds come up in several situations: tax paid in excess, accumulated input tax credit that cannot be used — commonly where supplies are zero-rated such as exports, or where the tax on inputs is higher than on outputs — and certain other specified cases. A refund is not paid out automatically; you have to claim it through the portal, supporting the claim with the relevant documents and reconciliations. Identifying early that you are in a refund position helps you avoid letting credit pile up unused.
A refund claim is filed on the portal with the supporting details, after which it is processed and, once sanctioned, credited to your bank account. Claims are subject to time limits and to verification, so accuracy and complete documentation speed things up while gaps cause queries and delays. Keep the underlying invoices, export evidence where relevant, and reconciliations ready before you file, and track the claim through its stages rather than assuming it will flow through on its own.
Eligible input tax credit is set off first against your output tax, and any remaining balance is paid in cash through a challan into your electronic cash ledger. Certain amounts, such as reverse-charge tax, must be paid in cash and cannot be settled using credit.
When you have paid tax in excess, or have accumulated input tax credit you cannot use — for example on zero-rated supplies like exports — among other specified cases. Refunds are not automatic; you must file a claim on the portal with supporting documents.
A claim is processed and, once sanctioned, credited to your bank account, but it is subject to time limits and verification. Complete and accurate documentation speeds processing, while gaps or mismatches lead to queries and delay.
Sitting on accumulated credit or unsure how much GST to pay in cash? Write to the firm and we'll review your ledgers and help you pay correctly or claim what you're owed.