TaxTMI 
TaxTMI 
Hi everyone, whether rule 86B which prescribes mandatory 1% payment of tax in cash is applicable to Compensation Cess charged on output supply?
Applicability of Rule 86b i.e, 1% payment of tax in cash applicable to cess also?
14 Jul 2026 
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Rule 86B cash-payment restriction may not extend to compensation cess, treated as an independent levy with separate credit treatment.
Rule 86B restricts use of electronic credit ledger balances for discharging output tax liability beyond the prescribed limit. The discussion predominantly treats compensation cess as outside this restriction because it is an independent levy, is not imposed under the CGST Act, and operates through a separate credit pool. A contrary view suggests that compensation cess credit in the electronic credit ledger may be subject to the same restriction. (AI Summary)
Rule 86B restricts use of electronic credit ledger balances for discharging output tax liability beyond the prescribed limit. The discussion predominantly treats compensation cess as outside this restriction because it is an independent levy, is not imposed under the CGST Act, and operates through a separate credit pool. A contrary view suggests that compensation cess credit in the electronic credit ledger may be subject to the same restriction. (AI Summary)