Rule 86B under CGST Act

[gunda ashok kumar]

One of my client has set off output tax with 100% ITC department issued notice to pay 1% cash.As per the frequent questions any month limit Rs.50 lakhs is not crossed but the turnover is more than Rs.6 crores in a financial year Rule 86B does not need to be complied with.If the turnover is less than Rs.6 crores in a financial year but the taxable supplies for any month exceeds Rs. 5o lakhs the Rule 86B stands attracted. I request the experts please clarify the issue how to proceed in the matter regarding if cash payment is made 1% how to get ITC

[Shilpi Jain]

cs given in rule 86B are not satisfied, the month in which the turnover exceeds 50L 1% will have to be paid in cash. 

The annual turnover is of no relevance.

[Shilpi Jain]

The implication could be payment is can and taking re credit. Also interest liability for the cash component.

[gunda ashok kumar]

Pl inform any case laws on rule 86BCGST  till to date

[Raam Srinivasan Swaminathan Kalpathi]

Where is the necessity to refer to a case law in this open and shut point?  As suggested by Madam Shilpi, please remit the tax through DRC-03 challan with interest and avail the excess remittance in the next month's 3B.  We can even mention the same in DRC-03 challan remarks column and intimate the same to the department also.

[KASTURI SETHI]

Case law is required only when law is not clear. In every  situation,  case law is not possible. I agree with  the views of  the experts.

[KUMAR Narasimhan]

Dear Sir / Madam,

If the Taxes had been paid through DRC-03 along with Interest then how it can be reclaim again in GSTR-3B?

[Affirmservicesconsultancy Privatelimited]

Sir

Please clarify that 1% cash in applicable head wise i.e. IGST, CGST & SGST seperately or cumulitive (on total tax amount) as per Rule 86B of CGST Act. 

[KASTURI SETHI]

Total 1 %    payable in cash.   Either IGST 1 %  or  CGST ; 0.50 % and SGST : 0.50%

AI Summary

Client Challenges Rule 86B Notice: 1% Cash Payment Demand Despite Full ITC Use for Monthly Supplies Over Rs. 50 Lakhs. A client faced a notice under Rule 86B of the CGST Act, requiring a 1% tax payment in cash despite using 100% Input Tax Credit (ITC) to offset output tax. The turnover exceeded Rs. 6 crores annually, yet the department's notice was based on monthly taxable supplies exceeding Rs. 50 lakhs. Experts advised that the rule applies when monthly turnover exceeds Rs. 50 lakhs, necessitating a 1% cash payment. Suggestions included paying through DRC-03 with interest and reclaiming excess in the next month's GSTR-3B. Clarifications were sought on whether the 1% applies separately to IGST, CGST, and SGST.