exception to rule 86B-Income tax paid in excess of Rs. 1 Lac in each of last 2 financial years

[SUSHIL BANSAL]

Dear experts,

Rule 86B of the CGST Rules, 2017 provides that the restriction on utilization of ITC shall not apply where:

"the registered person or the proprietor or karta or managing director or any of its partners, as the case may be, has paid more than Rs. 1,00,000 as income tax under the Income-tax Act, 1961 in each of the last two financial years for which the time limit to file return of income under section 139(1) has expired."

from the above exceptions I have certain queries:

The exception talks about Income tax paid. Whether Income tax paid will sum of TDS, TCS, Advance tax, Self-assessment tax or it will be net of refund.

Further the exception talks about income tax paid in last 2 F.Y. for which the time limit to file return of income under section 139(1) has expired. Suppose We want to check exception for F.Y.2021-22, then for which 2 F.Y. we will check Income tax paid. whether it will be FY 2019-20 & 2020-21 or fy 2020-21 & 2021-22.

AI Summary

GST ITC exception: income tax paid in the relevant prior years determines relief when filing GST returns.
Rule 86B conditions ITC utilisation relief on the registered person having paid income tax above the specified threshold in each of the two financial years for which the time limit to file return of income under section 139(1) has expired. The operative compliance step is to verify, at the time of filing GSTR-1/GSTR-3B, the income-tax payments shown in the relevant ITRs for the two financial years whose 139(1) due dates have passed; the particular pair of years depends on the filing deadline applicable when the GST return is filed. The exception applies only where taxable supplies exceed the high-turnover threshold.