Rule 86B

Please provide rule 86B in detail.
Replies (2)
Quick Summary
Rule 86B restricts the use of Input Tax Credit (ITC) for businesses whose taxable supply value exceeds £50 lakh per month. It limits ITC usage to a maximum of 99% of the output tax liability, meaning at least 1% must be paid via cash. Several exceptions apply, including for those who have paid significant income tax, received refunds, or are government entities.

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:

  • If the persons mentioned below have paid more than Rs.1 lakh as Income Tax under Income Tax Act, 1961
    • The registered person
    • Proprietor, karta or Managing Director of the registered person
    • Any of the partners or whole time directors or any other person as the case may be.
  • If the registered person under concern has received a refund of amount greater than Rs.1 lakh in the preceding financial year on account of export under LUT or due to inverted tax structure.
  • If the registered person under concern has discharged his liability towards output tax by electronic cash ledger for an amount in excess of 1% cumulatively of the total output tax liability up to the said month in the current financial year.
  • If the registered person under concern is any of the following:
    • Government department
    • Public sector undertaking
    • Local authority
    • Statutory Authority

As per rule 86B the taxpayer having taxable sales value of more than 50 lakhs cannot pay more than 99% of liability via Input tax credit (ITC). There are some exceptions to this rule

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Company
ARTICLESHIP 30 September 2026
CA Article Assistant

CA Suraj Garg & Associates

New Delhi

CA Final

View Details
Company
12 October 2026
AUDIT , ACCOUNTS AND TAXATION

KDSS

New Delhi

B.Com

View Details
Company
12 October 2026
Chartered Accountant - Internal Audit

HKC | Chartered Accountants & Business Advisors

Ludhiana

CA

View Details
Company
05 October 2026
Senior Accountant

Vision IT Peripherals Pvt Ltd

Mumbai

B.Com

View Details
Company
Featured 03 October 2026
Accountant

A P Lodha and Associates

Jalna

B.Com

View Details
Company
22 September 2026
Account Assistant

Chirag P Shah & Co. Chartered Accountant

Pune

B.Com

View Details
Company
14 October 2026
Asst. Manager/Dy Manager (Costing)

manufacturing

Pune

CMA

View Details
Company
26 September 2026
Chartered Accountant

pushpganga ventures

Pune

CA

View Details