Pre-deposit under Sections 107 and 112: the corrected arithmetic
The most expensive miscalculation in GST practice. It is also the easiest to get right.
For a first appeal under Section 107, the appellant must pay the full amount of tax, interest, fine, fee and penalty admitted, and ten percent of the remaining tax in dispute, subject to the statutory maximum. For an appeal to the Tribunal under Section 112, a further ten percent of the remaining amount of tax in dispute is payable, again subject to the maximum. The Finance (No. 2) Act, 2024 reduced the Tribunal pre-deposit and the caps at both stages, and inserted a separate rule for demands consisting only of penalty. Verify the figures against the provision as it applies to your appeal.
The four errors that recur
Computing ten percent of the total demand instead of ten percent of the disputed tax. Interest and penalty are excluded from the base. The base is tax in dispute.
Failing to pay the admitted portion in full. The admitted amount of tax, interest, fine, fee and penalty must be paid in full, and the ten percent applies only to the disputed tax.
Ignoring the statutory cap. The provision fixes a maximum, and for large demands the cap rather than the percentage governs.
Treating the Tribunal pre-deposit as cumulative with the first stage in the wrong way. The second stage is a further percentage of the remaining disputed tax, in addition to what was already deposited, not a recomputation from zero.
How to compute it, line by line
Separate the demand into tax, interest, penalty, fine and fee, for each issue and each year.
Mark each issue as admitted or disputed. Partial admission is permitted and often sensible.
Pay the admitted amounts in full, across all heads.
Compute the percentage on the disputed tax only, and compare it against the statutory cap.
Record the payment in DRC-03 with the cause of payment selected as a pre-deposit for appeal, and annex the challan to the appeal memorandum.
Where the same order covers several years, compute year wise, because a partial appeal for some years only changes the base.
What the pre-deposit buys
Section 107(7) provides that where the pre-deposit is made, the recovery proceedings for the balance amount shall be deemed to be stayed. That is a statutory stay and does not require an application.
The equivalent position applies at the Tribunal stage under Section 112(9).
It does not stay a provisional attachment already made, and it does not stay recovery for a different period or a different order.
It is refundable on success, with interest under the applicable provision, which is why the DRC-03 cause of payment must be recorded correctly.
When the pre-deposit itself can be challenged
Where the demand is inflated by an arithmetic error, the answer is a Section 161 rectification before the appeal, which reduces the base.
Where the demand is wholly without jurisdiction, the answer is a writ, in which no pre-deposit arises. Courts have entertained writs where insisting on a pre-deposit against a jurisdictionally void order would be futile.
Where the amount is beyond the taxpayer's capacity and the demand is prima facie unsustainable, some High Courts have granted relief on conditional terms. This is discretionary and requires financial disclosure.
What does not work is an application to the Appellate Authority to waive the pre-deposit. It has no such power.
What to do on Monday
Split the demand into heads and issues before computing anything; the base is disputed tax, not the demand.
Consider partial admission deliberately, because it reduces the pre-deposit and improves credibility.
Select the pre-deposit cause in DRC-03 and annex the challan to the memorandum.
File a rectification first where the demand contains an arithmetic error, because it lowers the deposit.
Claim interest on the refund of pre-deposit after a successful appeal; it is not paid automatically.
This page states the general position. A reader with a specific question on their own facts may write to the GST practice at AMLEGALS.
Write to the GST practiceQuestions we are asked on this
Can the pre-deposit be paid from the credit ledger?
For the tax component, the position has been clarified in favour of using the electronic credit ledger; interest and penalty must be paid in cash. See the dedicated page on this question.
Is the pre-deposit required for an appeal against a penalty only order?
A separate rule applies to demands consisting only of penalty, at a lower rate. Verify the current provision for your order.
What if we succeed partly?
The refund follows the outcome, and interest on the refund of pre-deposit is provided for. Claim it; it is frequently not paid unless claimed.
Can the Appellate Authority waive the pre-deposit?
No. It is a statutory condition of the appeal, and only a writ court can grant relief from it, in exceptional cases.
Does the pre-deposit stay a bank attachment?
It stays recovery of the balance under the order. An attachment under Section 83 is a separate order and must be separately addressed.
In this cluster
- GST appeals in 2026: the complete route from DRC-07 to the Supreme Court
- GSTAT appeals in 2026: limitation, pre deposit and the filing discipline that survives scrutiny
- Penalty only demands and the pre-deposit for appeal
- Condonation of delay in GST appeals: what persuades, and what does not
- Drafting grounds of appeal in GST: the structure that wins
- GSTAT Procedure Rules, 2025: the practitioner's walkthrough
- Stay of recovery pending appeal: Section 107(7) and beyond
- Additional evidence before the appellate authority under Rule 112
- Departmental appeals and the review mechanism under Section 107(2)
- Revisional powers under Section 108: when the Commissioner reopens
GST Insights is published by AMLEGALS for general information. Law stated as on 3 September 2026. Not advice on any particular set of facts; not an advertisement or a solicitation under Rule 36 of the Bar Council of India Rules. Readers with a question on their own facts may write to the GST practice of their own accord.