In a move to curb evasion by fake invoicing, the Finance Ministry, on Wednesday, announced that businesses with a monthly turnover of over ₹50 lakh will have to mandatorily pay at least 1 percent of their GST liability in cash.
The Central Board of Indirect Taxes and Customs (CBIC) has introduced Rule 86B in Goods and Services Tax (GST) rules which restricts the use of input tax credit (ITC) for discharging GST liability to 99 percent.
“The registered person shall not use the amount available in electronic credit ledger to discharge his liability towards output tax in excess of 99 percent of tax liability, in cases where the value of taxable supply in a month exceeds ₹50 lakh,” the CBIC said.
Sales from GST exempt goods and zero rates supply would not be included while calculating the turnover threshold.
However, this restriction will exempt where the managing director or any partner have paid more than ₹1 lakh as income tax or the registered person has received a refund amount of more than ₹1 lakh in the preceding financial year on account of any unutilised input tax credit.
AMRG & Associates Senior Partner Rajat Mohan said, “These changes indicate that government is grappling with lower tax collections and high tax evasions, the burden of which will again be on honest taxpayers”.
Authentication of Aadhaar number or physical verification of business premises to obtain GST registration has also been notified by the CBIC.
