GST Rule 86B Notice Received? 🚨 What to Do Now | Full Solution Explained

Описание: In this video, we explain Rule 86B of GST in simple language with practical examples.

Rule 86B restricts the use of Input Tax Credit (ITC). If your monthly taxable supply exceeds ₹50 lakh, you cannot use more than 99% ITC. Minimum 1% GST must be paid in cash.

Applicable Date: 01-01-2021
Notification No: 94/2020 – Central Tax

Topics Covered:
• What is Rule 86B
• When Rule 86B applies
• Minimum 1% cash payment rule
• Exceptions to Rule 86B
• Practical example
• Important points for GST taxpayers

This video is useful for:
• Business owners
• Chartered Accountants
• GST Practitioners
• CA Students
• Accountants

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Rule 86B of GST Rules, 2017 – Restriction on use of ITC

SECTION NAME = "Rule 86B – Restriction on use of Electronic Credit Ledger"

NOTIFICATION NO = 94/2020 – Central Tax
NOTIFICATION DATE = "22-12-2020
APPLICABLE_DATE = 01-01-2021

PURPOSE:
Prevent fake ITC usage
Ensure minimum GST payment in cash

APPLICABILITY_CONDITION:
IF Taxable Supply Value Per Month More Than 50,00,000
Rule 86B = APPLICABLE
ELSE
Rule 86B = NOT APPLICABLE

MAIN_RESTRICTION:
IF Rule 86B = APPLICABLE:
ITC Usage = 99% of Output Tax Liability
Cash Payment = 1% of Output Tax Liability

FORMULA:
Minimum Cash Payment = Output Tax Liability × 1%
Maximum ITC Usage = Output Tax Liability × 99%

EXAMPLE:
Taxable Supply = 80,00,000
GST Liability = 14,40,000

Minimum Cash = 14,40,000 × 1% = 14,400
Maximum ITC = 14,40,000 × 99% = 14,25,600

EXCEPTIONS:
Rule 86B NOT applicable IF any condition TRUE:

CONDITION_1:
Income Tax Paid Last 2 Years = 1,00,000 each year

CONDITION_2:
GST Refund Last FY = 1,00,000
Refund Type IN ("Export under LUT", "Inverted Duty Structure")

CONDITION_3:
Cash Payment Current FY = more than 1% of Total GST Liability

CONDITION_4:
Entity Type IN
"Government Department",
"Public Sector Undertaking",
"Local Authority",
"Statutory Authority"


IMPORTANT_POINTS:
Applies GSTIN-wise
Applies Monthly
Effective From = 01-01-2021
Checked during GSTR-3B filing


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