By Notification No. 94/2020 dt 22.12.2020, a new Rule 86 B is inserted in the CGST Rules 2017.
In nutshell it provides as under:
The tax liability for any tax period , ordinarily monthly , can be paid through credit ledger (ITC) only to the extent of 99 % of the total tax liability and balance shall be paid in cash even if credit ledger equals or in excess of tax liability for the tax period. So, for example credit register shows credit of Rs 5,00,000.00 and tax liability is Rs 4,50,000.00 then registered person has to pay Rs 4500.00 in cash and balance by credit ledger.
But this rule shall not be applicable to following registered dealers.
i) The taxable turnover for the tax period, for example, excluding exempt and export turnover is less than Rs 50,00,000.00
ii) The said person or the proprietor or karta or the managing director or any of its two partners, whole-time Directors, Members of Managing Committee of Associations or Board of Trustees, as the case may be, have paid more than one lakh rupees as income tax under the Income-tax Act, 1961(43 of 1961) in each of the last two financial years for which the time limit to file return of income under subsection (1) of section 139 of the said Act has expired; or
iii) The registered person has received a refund amount of more than one lakh rupees in the preceding financial year on account of unutilised input tax credit under clause (i) of first proviso of sub-section (3) of section 54; or
iv) The registered person has received a refund amount of more than one lakh rupees in the preceding financial year on account of unutilised input tax credit under clause (ii) of first proviso of sub-section (3) of section 54; or
v) The registered person has discharged his liability towards output tax through the electronic cash ledger for an amount which is in excess of 1% of the total output tax liability, applied cumulatively, upto the said month in the current financial year; or
vi) The registered person is – (i) Government Department; or (ii) a Public Sector Undertaking; or (iii)a local authority;or (iv)a statutory body:
vii) The Commissioner or an officer authorised by him in this behalf has removed restriction of Rule 86B restriction after such verifications and such safeguards as he may deem fit.
