How does PMT 09 make GST rectification easier?

Since it was first implemented in July 2017, the Goods and Services Tax has been continually evolving. This evolution has been taking place mainly due to feedback provided by taxpayers based on the glitches and difficulties experienced while filing returns or dealing with the GST portal.

A major pain point for taxpayers while filing their GST returns was accidentally depositing their output tax liability under the wrong GST head. For instance, a taxpayer could accidentally deposit the output tax liability meant for the Central Goods and Services Tax under the State Goods and Services Tax. Unfortunately, there was no provision to make any amendments or adjustments so the taxpayer would be forced to make a second deposit under the Central Goods and Services Tax head and claim a refund under the State Goods and Services Tax head for having paid additional tax. The entire exercise was not only time consuming; it was very cumbersome. It would also lead to liquidity issues as the refund claims generally take time to process, sometimes even months.

In a bid to ease rectifications and amendments while filing GST returns, the Central Board for Indirect Taxes and Customs (CBIC) has introduced the new PMT-09 form. This form will facilitate the transfer of cash from one tax head to another tax head under the taxpayer’s electronic cash ledger. Using this form, taxpayers will be able to transfer any amount of tax, interest, penalty or cess accumulated in their electronic cash ledger under the heads of IGST, SGST and CGST. This facility can be availed up in the taxpayer’s electronic cash ledger itself.

The Government has made an amendment in Finance (No. 2) Act, 2019 (23 of 2019) by inserting sub section 10 and 11 to Section 49 of The Central Goods and Services Tax Act, 2017 on 30 August 2019 which is applicable w.e.f. January 1, 2020 in accordance with Rule 87 of The CGST Rules, 2017. Sec 49 (10) and (11) are reproduced as below:-

(10) A registered person may, on the common portal, transfer any amount of tax, interest, penalty, fee or any other amount available in the electronic cash ledger under this Act, to the electronic cash ledger for integrated tax, central tax, State Tax, Union territory tax or cess, in such form and manner and subject to such conditions and restrictions as may be prescribed and such transfer shall be deemed to be a refund from the electronic cash ledger under this Act.

(11) Where any amount has been transferred to the electronic cash ledger under this Act, the same shall be deemed to be deposited in the said ledger as provided in sub-section (1).” CBIC has also made corresponding changes in Rule 87 CGST rules, 2017 which deals with electronic cash ledger vide Notification No. 31/2019- Central Tax dated 28 June, 2019, by inserting sub rule 13 namely “ A registered person may, on the common portal, transfer any amount of tax, interest, penalty, fee or any other amount available in the electronic cash ledger under the Act to the electronic cash ledger for integrated tax, central tax, State tax or Union territory tax or cess in Form GST PMT-09”.

While the PMT09 form was not immediately activated after this amendment was made, it has been implemented now in wake of the Coronavirus crisis and is available on the GST portal.

GST rectification for deposits under the wrong tax head becomes a whole lot easier now that taxpayers have access to the PMT 09 form. Using this form, taxpayers can transfer an amount from one minor or major head to another minor or major head. This completely eliminates the process of filing for a refund in case of erroneous deposit under the wrong tax head. If a taxpayer has erroneously paid their output tax liability under CGST instead of SGST, they can rectify the same using the PMT 09 form. This form will allow them to reallocate the amount between tax heads or other sections of late fee or interest.

To understand how to file PMT 09, here is a step by step guide.