GST NEW RULE 86B OF CENTRAL GOODS AND SERVICES ACT, 2017
GST rule 86B, Restrication on Utilization of ITC
As per GST Notification No. 94/2020 Dated 22 December, 2020, GST rule 86B has been introduced which has imposed 99% restricted on ITC available in electronic credit ledger of Registered Person. According to this Law 1% of Output liability to be paid in cash. This limitation is applicable where the value of taxable supply other than exempt supply and zero-rated supply, in a month exceeds fifty lakh rupees.
Pre Implementation of Rule how was ITC Utilization allowed under Act:-
However, the ITC available in the electronic credit ledger could always be fully utilised for discharging the output tax liability. The new Rule 86B has limited the use of ITC balance for paying its output tax liability.
Applicability Restriction after Post Implementation of Rules:-
Applicability: This rule is applicable to registered persons having taxable value of supply (other than exempt supply and zero-rated supply) in a month which is more than Rs.50 lakh. The limit has to be checked every month before filing each return.
Restriction imposed: The applicable registered persons cannot use ITC in excess of 99% of output tax liability. In simple words, more than 99% of the output tax liability cannot be discharged by using input tax credit.
Provided that the said restriction shall not apply where –
If the persons mentioned below have paid more than Rs.1 lakh as Income Tax under Income Tax Act, 1961