GST Rule -86B- Restriction on ITC utilisation

 

Applicability of Rule*

 

This rule is *applicable on the registered person whose value of taxable supply* other than exempt supply and export, in a month *exceeds fifty lakh rupees*.

 

*Rs 50 lakhs limit to be checked for each month*

 

As per said Rule, *taxpayer cannot use Input Tax Credit in excess of 99% of output tax liability*.

 

*Non-applicability*

 

This Rule is not applicable in following cases:-

 

1.    Where the *registered person deposited more than Rs 1 lakh rupees as income tax* *under the Income-tax Act, 1961 in each of the last two financial years*

 

2.    wherein *registered person has received a refund more than Rs 1 lakh rupees in the preceding financial year* on account of *export under LuT* or *inverted tax structure*

 

3.    wherein cumulatively upto the said month in the current financial year *registered person has discharged his output tax liability in cash which is in excess of 1% of the total output tax liability*,

 

*for example*

 

In the FY 2020-2021, upto November 2020, output tax liability comes to Rs 10 lakh and taxpayer deposited Rs 10,000/- in cash upto Nov 2020 then this rule is not applicable

 

*Imp Note*

 

Taxpayer has to track each month that cumulative discharge of output tax liability in cash in current FY is more than 1% upto filing of return

 

4.    This rule *not applicable on govt department, PSU, local authority*