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13 June 2025

There is a rule for paying 1% on liability in gstr3b when turnover crosses 50 lacs in a month..

My question is, in QRMP we have to file quarterly return.if suppose in 3 month aggregate turnover crosses 50 lacs but not monthly then still we have pay 1% on liability or not??

Or if such a rule is applicable on QRMP or not?

Pls. Reply

Thank u

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Jayasurya B (CA Finalist) (103 Points)
Replied 13 June 2025

Applicability of Rule 86B

This rule applies to registered businesses under the GST regime whose taxable value of supplies (excluding exempt and zero-rated supplies) exceeds Rs. 50 lakh in a particular month. It's crucial to assess the taxable turnover every month before filing GST returns to determine applicability.

Restrictions Imposed

Rule 86B mandates that applicable registered persons cannot utilize ITC exceeding 99% of their total output tax liability. In simpler terms, businesses with a monthly taxable turnover above Rs. 50 lakh are required to pay at least 1% of their output tax liability in cash. This 1% cash payment effectively restricts the usage of ITC accumulated through purchases.

Exceptions to the Rule

While Rule 86B applies to most businesses exceeding the Rs. 50 lakh turnover threshold, certain exceptions exist. These exceptions include:

Businesses paying high income tax: If a registered person or the proprietor/karta/managing director/partners have paid income tax exceeding Rs. 1 lakh in each of the preceding two financial years, they are exempt from the rule.
Businesses receiving a refund: 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
Paid Output Tax in Excess of 1% Cumulatively: 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.
Statutory bodies: Government bodies i.e. Government department, Public sector undertaking, Local authority and Statutory Authority are not subject to the restrictions imposed by Rule 86B.
Discretion of Commissioner: The Commissioner or authorized officials can, at their discretion and after due verification, remove the restriction on a case-by-case basis.
Conclusion
No, QRMP is not required to pay 1% tax liability in cash as per rule 86B. Rule 86B specifically mentioned the word Monthly turnover and not a quarterly ( under GST, Quarterly means Apr-June, July-Sep, Oct-Dec, Jan-Mar ). Hence Rule 86B Not applicable in this case subject to QRMP Scheme.