Gstr-7 gst payment issue

One of the state government department to whom TCS is applicable under GST has done a typographical error while remitting payment. They deducted TCS of their approved vendor @ 2% i.e. CGST and SGST 1% each. They have to pay Rs.2,80,000/- to vendor and Rs.5600 towards TCS Under GST, They created GST challan of Rs.5600/-. But when released payment IFSC code and account number have been interchanged by the computer operator. The payment has been done via treasury office who approves and make payment on behalf them. Now, the vendor received payment of Rs.5600/- instead of Rs.2,80,000/- and now the details of Rs.2,80,000/- with wrong IFSC and account number are awaited. Now question arise is that whether the payment of Rs.2,80,000/- will be done or not? and if Done how to get refund of the same? Is it possible that if CPIN value is Rs.5600/- differ with actual payment Rs2,80,000/-, the system accepts it or rejects it?

Please advise.

Hey Jatin, here’s a breakdown of your GST TCS payment issue and how it’s generally handled:

Situation Recap:

TCS deducted: ₹5,600 (correctly generated challan for TCS amount)
Vendor payment due: ₹2,80,000 (payment to vendor)
Error: IFSC and account number interchanged while making payment via treasury.
Effect: Vendor received ₹5,600 (TCS amount), but ₹2,80,000 not credited correctly.
Pending: ₹2,80,000 payment with wrong bank details.

Key points and clarifications:

TCS Payment vs Vendor Payment:
- The ₹5,600 is the TCS (tax collected at source) amount payable to government.
- The ₹2,80,000 is the payment to the vendor, separate from TCS.
System behavior with CPIN amount mismatch:
- The CPIN (Challan Payment Identification Number) is linked to the tax payment (₹5,600 TCS challan).
- The treasury’s payment of ₹2,80,000 is a separate payment to vendor via bank transfer, not part of CPIN system for GST payments.
- So CPIN will not accept or reject ₹2,80,000 payment, because CPIN is for tax challans only.
What happens with wrong IFSC/account number payment?
- If payment to vendor was made to a wrong bank account, the money is likely held in a suspense account or bounced back after bank reconciliation.
- The treasury or state government department should initiate a refund request from the bank or reverse the transaction once identified.
Will ₹2,80,000 be paid eventually?
- Yes, once the error is identified and corrected, the payment will be made to the correct vendor account.
- It’s important that the government department coordinates with treasury and bank to reverse/recall incorrect payment and make correct payment.
How to get refund?
- Refund is handled via banking channels, not GST system.
- The government department’s treasury will raise refund/reversal request with the bank to get ₹2,80,000 back from the wrong account, then pay to correct account.

What you should advise the department:

Immediately inform the treasury and bank about the wrong IFSC and account payment.
Request a reversal or refund of ₹2,80,000 from the wrong account.
Make payment to the vendor’s correct bank details after refund.
For TCS challan of ₹5,600, no issue as this was done correctly and reflected in GST portal.
Keep proper documentation of refund/reversal process for audit and reconciliation.

Summary:

The GST system accepts and reconciles ₹5,600 TCS payment (challan + CPIN).
Vendor payment (₹2,80,000) via treasury is separate and needs banking correction.
Treasury and department must coordinate with bank for refund of wrong payment.
Once refund received, pay vendor correctly.