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Rule 86B and RCM

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Ahuja Shekhar

Accountant

53 Points Posted on 11 May 2022

Respected Sirs,

Whether Cash Paid for RCM will be counted in 1% cash required to be paid under rule 86b.

For Example: I need to pay 10,000/- under Rule 86B and I am paying 9000/- under RCM.

Then what amount i need to pay under Rule 86B, Rs. 1000/- or 10,000/- ??

Replies (2)

Quick Summary

This discussion clarifies whether cash paid for Reverse Charge Mechanism (RCM) counts towards the 1% cash payment mandated by Rule 86B. It explains that RCM payments can be used as Input Tax Credit (ITC) against output tax liability. However, Rule 86B requires a minimum cash payment of 1% of the output tax if monthly taxable sales exceed £50,00,000, separate from RCM obligations.

Kev Men

486 Points Posted on 11 May 2022

In the above example, the RCM paid in cash of Rs. 9000/- can be used as ITC for the output tax of Rs. 10000/-. As per the Rule 86B, Rs. 100/- will atleast need to be paid in cash against the output tax of Rs. 10000/-

Kesavaraj S

333 Points Posted on 11 May 2022

RCM and 86B are different perspects Because U/s 86B Cash paid @ 1% of output tax liability if the monthly Taxable sales value( excluding export & exempted sales) exceeds Rs.50,00,000/- and RCM is to be paid unregisteted dealer purchase.