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A business cannot explain why the GST portal asks for a cash payment when it believes it has credit, or why portal balances differ from the GST ledgers in its books.
The cash ledger is increased by challans and used for any liability; the credit ledger is increased by ITC claimed in GSTR-3B and used only for output tax; the liability register records what is owed and is cleared by set-off.
Monthly download of all three ledgers, matched to the GST cash, input and output ledgers in Tally or Zoho Books, with a timing list for open items.
Portal and book balances that agree or have a dated reason for each difference, and no surprise cash call on the 20th.
The GST portal keeps three running accounts for every registration. The electronic cash ledger holds money you deposit. The electronic credit ledger holds the input tax credit (ITC) you have claimed. The electronic liability register records the tax, interest and late fee you owe. Filing GSTR-3B and paying challans moves amounts between them.
What moves each ledger?
| Ledger | Increased by | Reduced by | Main form or event |
|---|---|---|---|
| Electronic cash ledger (Form GST PMT-05) | Challan deposits; TDS and TCS credits from others | Paying tax, interest, late fee, penalty; refunds | Challan Form GST PMT-06 |
| Electronic credit ledger (Form GST PMT-02) | ITC claimed in GSTR-3B Table 4 | Paying output tax; reversals; refunds of credit | GSTR-3B |
| Electronic liability register (Form GST PMT-01) | Tax declared in GSTR-3B; interest; late fee; demands | Payments set off from cash or credit ledger | GSTR-3B and demand orders |
Each ledger is split into IGST, CGST, SGST (or UTGST) and cess. Within the cash ledger, each head is further split into tax, interest, penalty, fee and others.
What can the credit ledger pay, and what must be paid in cash?
Under Section 49 of the CGST Act, 2017, the credit ledger can pay only output tax. It cannot pay:
- interest under Section 50
- late fee under Section 47
- penalties
- tax under reverse charge (this must be paid in cash, and then claimed back as credit)
Those come only from the cash ledger. That is why a business with a large credit balance can still face a cash payment.
There is also an order of use: IGST credit is used first, and CGST credit cannot pay SGST, nor SGST pay CGST. The portal applies these rules for you in GSTR-3B.
Worked example: ₹1,80,000 of tax and a late fee
A Kochi business files its GSTR-3B three days late. For the month:
- Output tax: ₹1,80,000
- Credit ledger balance (ITC claimed this month): ₹1,08,000
- Late fee: ₹50 per day in total for 3 days = ₹150
- Interest at 18% a year on the cash portion of tax for 3 days: ₹72,000 times 18% times 3 / 365 = about ₹106
Settlement:
| Item | From credit ledger | From cash ledger |
|---|---|---|
| Output tax ₹1,80,000 | ₹1,08,000 | ₹72,000 |
| Late fee ₹150 | Not allowed | ₹150 |
| Interest about ₹106 | Not allowed | ₹106 |
| Total | ₹1,08,000 | about ₹72,256 |
The business must have about ₹72,256 in the cash ledger before it can file, even though it holds ₹1,08,000 of credit.
Why can a ledger balance on the portal differ from your books?
- Challan timing: a payment made on the last day may credit the cash ledger the next day.
- Credit claimed in a different month: your books may book ITC when the invoice arrives; the portal adds it only when you claim it in GSTR-3B.
- Reversals and blocked credit: booked in one place and not the other.
- TDS and TCS credits: amounts deducted by government buyers or collected by e-commerce operators land in your cash ledger and need to be booked.
- Interest and late fee: often paid on the portal but not entered in the books.
Download all three ledgers each month and match them to the GST cash, input and output ledgers in Tally or Zoho Books.
What to read next
For the filing-week routine that uses these balances, read the GSTR-1 and GSTR-3B runbook for days 16 to 20. If credit keeps building up, see how to claim a refund of excess balance in the electronic credit ledger. For the form itself, see how to read GSTR-3B Tables 3.1 and 4.
GST outward reconciliation (GSTR-1 and GSTR-3B) leads the TransactIG GST roadmap; inward matching (GSTR-2B, ITC, IMS) is on the roadmap. See the GST reconciliation page.