Rule 86B Cumulatively

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Shaikh Shahnawaz

70 Points Posted on 10 November 2023

The client has paid through the cash ledger cumulatively till September-23:

CGST- Rs 200000/-
SGST- Rs 0/-
IGST- Rs 0/-

October months turnover is Rs 50 lakhs & liability as:

CGST- Rs 405000
SGST- Rs 405000
IGST- Rs 90000

Is rule 86B applicable to me as I have paid cumulatively more than 1% or whether rule 86B applies for each C, S & I separately.

Replies (3)

Quick Summary

This discussion clarifies the application of Rule 86B, specifically concerning the cumulative cash payment exception. It explains that the 1% rule is based on the total output tax liability (CGST, SGST, and IGST combined), not on each tax head separately. If your total cash payments cumulatively exceed 1% of your total output tax liability up to the current financial year's month, Rule 86B will not apply to you.

Manish

878 Points Posted on 10 November 2023

No, rule says about 1% of total output tax, i.e., C+S+I.

It's not applicable in your case in Oct. since you've already paid more than 1% in cash.

Aashok Kumar Sharma

Finance/Compliance Consultant

75663 Points Posted on 08 November 2026

Rule 86B cumulative cash payment exception:

• Rule 86B doesn't apply where the registered person has discharged output tax liability in cash exceeding 1% of the total output tax liability, applied cumulatively, up to the said month in the current FY (proviso (d)).

• The rule compares cumulative cash payment with 1% of the total output tax liability. In practice, compare total cash paid (all heads) with 1% of total output tax (all heads) up to that month.

• If cumulative cash (Rs 2 lakh CGST, nil SGST) exceeds 1% of the cumulative total output liability (CGST + SGST + IGST), the exception applies.

Aashok Kumar Sharma

Finance/Compliance Consultant

75663 Points Posted on 08 November 2026

Rule 86B cumulative cash payment exception:
• Rule 86B doesn't apply where the registered person has discharged output tax liability in cash exceeding 1% of the total output tax liability, applied cumulatively, up to the said month in the current FY (proviso (d)).
• The rule compares cumulative cash payment with 1% of the total output tax liability. In practice, compare total cash paid (all heads) with 1% of total output tax (all heads) up to that month.
• If cumulative cash (Rs 2 lakh CGST, nil SGST) exceeds 1% of the cumulative total output liability (CGST + SGST + IGST), the exception applies.