Rule 86B of Gst

INTRODUCTION *Rule 86B is applicable to those registered persons who are having a turnover from taxable supply of goods or services or both in a month exceeding Rs. 50 Lakhs. other than exempted and Zero-rated supply In case, the turnover of a registered person is more than Rs. 50 Lakhs in a particular month, then only 99% of the output tax liability can be discharged through ITC available in electronic credit ledger. 1% of the output tax liability shall be required to be paid in cash. THERE ARE CERTAIN SCENARIO WHEN RULE 86B IS NOT APPLICABLE. Proviso to Rule 86B provides the cases where restriction on utilisation of ITC available in electronic credit ledger shall not be applicable. If the taxpayer falls in any one of these cases, Rule 86B shall not apply:

(a) If any of the persons mentioned below have paid income tax more than Rs. 1 Lakh in each of the two financial years for which the due date of filing ITR has expired:

• The said registered person or

• Proprietor

• Karta (in case of HUF)

• Managing Director or whole-time director (in case of company)

• Any of the partners (in case of firm)

• Members of Board of Trustees or

(b) Where the registered person has received a refund of an amount more than Rs. 1 Lakh in the preceding financial year on account of unutilised ITC in case of:

• Zero-rated supplies without payment of tax (Export under LUT)

• Credit accumulated on account of higher rate of tax on inputs as compared to rate of tax on output (Inverted tax structure) or

(c) If the registered person has paid output tax liability through electronic cash ledger for an amount in excess of 1% cumulatively up to the said month in the current financial year or

(d) If the registered person is any of the following:

• Government Department

• Public Sector Undertaking

• Local Authority