Payment of Tax and Other Amount in Instalments – Section 80 of GST

Timely payment of tax dues is a critical responsibility for every registered taxpayer under the GST regime. However, there may be genuine circumstances where a taxpayer is unable to pay the entire tax liability in a lump sum. Recognising such situations, Section 80 of the CGST Act, 2017, provides a mechanism to ease the burden by allowing payment of tax and other dues in instalments.

In this blog, we will explore the provisions of Section 80 in detail, including eligibility, conditions, limitations, and implications of default.

Understanding Section 80: Key Provisions

Statutory Text:

Section 80 of the CGST Act states:

“On an application filed by a taxable person, the Commissioner may, for reasons to be recorded in writing, extend the time for payment or allow payment of any amount due under this Act, other than the amount due as per the liability self-assessed in any return, by such person in monthly instalments not exceeding twenty-four, subject to payment of interest under section 50 and subject to such conditions and limitations as may be prescribed.

Provided that where there is default in payment of any one instalment on its due date, the whole outstanding balance payable on such date shall become due and payable forthwith and shall, without any further notice being served on the person, be liable for recovery.”

Key Highlights of Section 80

1. Eligibility for Instalment Facility

Any registered taxable person under GST may apply for payment of dues in instalments. However, this facility is not applicable to amounts that are self-assessed in GST returns, such as GSTR-3B or GSTR-1. Only other dues, such as those arising out of assessments, audit proceedings, or adjudication orders, are eligible.

2. Application to the Commissioner

The taxpayer must file a formal application to the jurisdictional Commissioner, stating the reason for the request. The Commissioner has the discretion to:

• Extend the time for payment, or

• Allow payment in monthly instalments, with a maximum cap of twenty-four instalments.

3. Interest Liability

The taxpayer is liable to pay interest under Section 50 of the CGST Act on the delayed payment. This interest is calculated on the outstanding amount for the duration of delay, as per applicable rates.

4. Conditions and Limitations

The facility is subject to conditions and limitations as prescribed under the CGST Rules or as may be specified by the Commissioner in individual cases. These may include:

• Submission of security or surety

• Compliance history of the taxpayer

• Financial hardship justification

• Regular payment track record

5. Consequences of Default

If the taxpayer defaults in payment of any single instalment on its due date:

• The entire outstanding balance becomes immediately due.

• No separate notice is required for recovery.

• Recovery proceedings may be initiated as per GST recovery provisions.

Benefits of Section 80 to Taxpayers

Section 80 offers a practical relief mechanism for genuine taxpayers facing temporary financial difficulties. Key advantages include:

• Flexibility to pay large dues in manageable instalments

• Reduced burden of immediate lump-sum payment

• Continued business operations without fear of immediate recovery action

Practical Scenarios Where Section 80 Applies

• A taxpayer has an outstanding tax demand of ₹5 lakhs arising from adjudication under Section 73 or 74 and is unable to pay in one go.

• After audit proceedings, a liability is created which the taxpayer wants to settle over time due to cash flow constraints.

• The taxpayer has failed to pay tax due to financial hardship and seeks to avoid recovery action by opting for instalment payment.

How to Apply for Instalments Under Section 80

1. Prepare a formal application with relevant details and reasons for the request.

2. Submit the application electronically or manually to the jurisdictional Commissioner.

3. Await approval with written order specifying the number of instalments, interest payable, and any additional conditions.

4. Ensure timely payment of all instalments to avoid default consequences.

Conclusion

Section 80 of the CGST Act serves as a significant relief measure, offering flexibility to genuine taxpayers struggling with temporary liquidity issues. However, it is crucial to understand the limitations, especially the exclusion of self-assessed return liabilities and the strict consequences of default. Proper planning, compliance with prescribed conditions, and timely payment of instalments can help taxpayers leverage this provision effectively.

Businesses facing financial difficulties should consider seeking professional advice and explore the possibility of availing instalment benefits under Section 80 to stay compliant and avoid recovery actions.

Need help with GST compliance or representation before GST authorities? Get in touch with our expert team of Chartered Accountants for professional support.