(TAX CONSULTANT AUDIT ASSISTANT)
Replied 27 August 2021
Rule 86B limits the use of input tax credit (ITC) available in the electronic credit ledger for discharging the output tax liability. This rule has an overriding impact on all the other CGST Rules.
This rule is applicable to registered persons having taxable value of supply in a month which is more than Rs.50 lakh. The limit has to be checked every month before filing each return.
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.
Exceptions to the Rule: