Turnover Based Exemption
The Government's decision on mandatory payment of at least 1% of GST tax liability in cash will only apply to establishments having an annual turnover of Rs. 6 Crore and the new rule 86B which is applicable from 01-01-2021 will not apply to micro and small businesses, composition dealer as said by finance Ministry sources on 27-12-2020.
Based on the recommendations of the GST Law committee, the Government has notified new indirect tax rules that make a cash payment of 1% of GST tax liability mandatory for businesses whose taxable supply value exceeds Rs. 50 lakh in a month.
The new rules for mandatory payment of 1% GST tax stoke hardship on small businesses and will increase their Working Capital requirement.
Apart from the turnover based exemption, the cash payment rule will also not apply in cases the registered person deposited more than Rs 1 lakh as income tax in each of the last two years and where such person has received a refund of more than Rs 1 lakh in the preceding Financial Year on account of the export or inverted tax structure also the sale was not applicable to PSU, Government Department and Local Authority.
The new rule is expected to control fake invoices fraudsters who avail and pass on ITC by dummy, fake and dormant entities which shows high Turnover and but have no financial credibility and flee after issuing fake invoices and misusing ITC.
Source- News 18