Section 49 – Payment of Tax, Interest, Penalty and Other Amounts
Section 49 of CGST Act, 2017 – Payment of Tax, Interest, Penalty and Other Amounts
Updated on: February 2026 (as applicable till date)
Prepared by: Yours Tax Consultant
1. Scope and Importance of Section 49
Section 49 lays down the mechanism for payment and utilisation of GST liabilities.
It governs:
- Electronic cash ledger
- Electronic credit ledger
- Order and manner of utilisation of ITC
- Adjustment of tax, interest, penalty and other dues
This section is the financial backbone of the GST system.
2. Electronic Ledgers under GST – Section 49(1) to 49(4)
GST law provides for the following electronic ledgers:
2.1 Electronic Cash Ledger – Section 49(1)
All deposits made by a person towards:
- Tax
- Interest
- Penalty
- Fee
- Any other amount
are credited to the Electronic Cash Ledger.
This ledger is maintained on the GST portal.
2.2 Electronic Credit Ledger – Section 49(2)
Input Tax Credit (ITC) availed under GST is credited to the Electronic Credit Ledger.
ITC can be utilised:
- Only for payment of output tax
- Subject to conditions and restrictions
2.3 Electronic Liability Register – Section 49(3)
All liabilities of a registered person are recorded in the Electronic Liability Register, including:
- Self-assessed tax
- Interest
- Late fee
- Penalty
3. Utilisation of ITC – Section 49(4)
The amount available in the electronic credit ledger may be used for making payment of:
- Output tax
ITC cannot be used for:
- Interest
- Penalty
- Late fee
Such amounts must be paid in cash.
4. Order of Utilisation of ITC – Section 49(5)
Section 49(5) prescribes the statutory order for utilisation of ITC.
In summary:
- IGST credit → IGST, then CGST / SGST
- CGST credit → CGST, then IGST
- SGST credit → SGST, then IGST
Cross-utilisation between CGST and SGST is not permitted.
Relevant Rule:
5. Payment of Tax and Other Dues – Section 49(6)
All payments made towards:
- Tax
- Interest
- Penalty
- Fee
shall be credited to the respective Government in accordance with the order prescribed.
6. Interest, Penalty and Late Fee – Cash Only
As per Section 49:
- Interest under Section 50
- Late fee under Section 47
- Penalty under Chapter XIX
must be paid only through Electronic Cash Ledger.
7. Transfer Between Ledgers – Section 49(10)
The law permits:
- Transfer of balance from one head to another
- Transfer between cash ledger heads
This avoids unnecessary refund and re-deposit.
8. Section 49 Read with CGST Rules
Section 49 must be read with:
- Rule 85 – Electronic Liability Register
- Rule 86 – Electronic Credit Ledger
- Rule 87 – Electronic Cash Ledger
9. Common Practical Issues
- Wrong order of ITC utilisation
- Short cash payment of interest
- Blocked ITC utilisation
- Ledger balance mismatches
10. Related Provisions
11. Professional Insight
Many GST disputes arise not from tax computation, but from wrong utilisation of ITC. Section 49 compliance is essential to avoid interest and penalty exposure.
Disclaimer: This article is prepared based on the CGST Act, CGST Rules, notifications and prevailing legal position as applicable till date. Future amendments or judicial pronouncements may require revision.
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