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CGST Rule 86B

saurabh sawlani (Self employed ) (2193 Points)

14 February 2021

dear colleagues,

ek rule hai jisme kisi firm ka turnover one month me 50 lac se excess hai. toh usse total tax ka 1% tax cash me pay krne padega... ye rule konsa hai... uski details batao.. or ye kab se applicable hoga...

regards

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CA SEEMA AGARWAL (Chartered Accountant) (414 Points)
Replied 14 February 2021

Never heard of any such rule in direct or indirect tax

Shivam RC (Student) (23683 Points)
Replied 14 February 2021

Yes Sir there is a rule in the CGST Rules 2017 which has been inserted recently in the CGST ( Fourteenth Amendment ) Rules 2020 w.e.f 01st January 2021.

A new Rule i.e. "Rule 86B" has been inserted to the CGST Rules 2017 vide Notification No. 94/2020 - Central Tax, dated 22nd December 2020, w.e.f 01st January 2021, which deals with Restricting the use of ITC amount for discharging Output Tax Liability in GST.

This New Rule ( Rule 86B ) is applicable where value of taxable supply other than exempt supply and export, in a "month exceeds INR 50 lakhs". Note that Rs. 50 lakhs turnover limit needs to be considered monthly and not in full year wise.

According to this Rule, the Taxpayer is not allowed to use ITC in excess of 99% of output tax liability if his turnover in a month exceeds Rs. 50 lakhs. This means that the taxpayer is required to pay 1% GST ( Output Tax liability ) by using his Electronic CASH LEDGER and rest 99% by using his Electronic CREDIT LEDGER.

However there are certain exceptions provided to above restrictions. They are :

1). If the registered person has paid more than INR 1 lakh as Income Tax under the Income-tax Act, 1961 in each of the last two financial years.

2). If the registered person has received a Refund amount of more than INR 1 lakh in the preceding financial year on account of export under LUT/Bond or Inverted Duty Structure.

3). If 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.

4). If the registered person is the Government Department, Public Sector Undertaking, Local Authority or Statutory Body.

The above said Rule is in force w.e.f 01st January 2021.

Hope it is clear now @ Saurabh Sawlani Sir.

Regards,
Shivam RC.

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saurabh sawlani (Self employed ) (2193 Points)
Replied 14 February 2021

Thank you so much shivam sir... bss aap hi k reply ka wait kr rha tha... thank a lot.. shivam sir ek or query hai ye jo new section hai 206C(1H)... isme sir 2 conditions hai 1). firm ka turnover last fy me 10 cr. se excess hona chaiye or 2). single buyer ko current fy me above 50 lac . ka transaction... so shivam sir meri 2nd condition toh puri ho rhi hai lekin 1st nhi toh mere client per ye tcs provision applicable hoga ya nhi...

regards,

CA Altamush Zafar (GST Consultant) (15986 Points)
Replied 14 February 2021

No it won't be applicable

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Shivam RC (Student) (23683 Points)
Replied 15 February 2021

नहीं Saurabh Sir. आपके Client को TCS U/s 206C(1H) of the Income Tax Act 1961 नहीं कलेक्ट करना पड़ेगा क्योंकि उनका turnover पिछले साल में Rs. 10 crores ( FY 2019-20 ) से कम था ।

Rs. 10 crores turnover in the preceding financial year condition is the important condition for determining the levy of TCS U/s 206C(1H) of the Act w.e.f 01st October 2020.

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