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

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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