The biggest GST amendment of 2020 was announced by the Government by the CGST Notification to restrict the use of 100% ITC balance for payment of monthly output liability. The summary of said provisions is given hereunder for your immediate reference and consideration. [Introduction of Rule 86B]
With effect from the 1st day of January 2021, the registered person with a monthly turnover of more than 50 Lacs will have to pay/discharge at least 1% of output liability in cash. In other words, the Utilisation of ITC from the Electronic Credit Ledger will not be allowed in the case of such taxpayers.
The above restriction not applied to the following registered person:
- The said person or the proprietor or Karta or the managing director or any of its two partners, whole-time Directors, Members of Managing Committee of Associations or Board of Trustees, as the case may be, have paid more than one lakh rupees as an income tax under the Income-tax Act, 1961 in each of the last two financial years for which the time limit to file a return of income under subsection (1) of section 139 of the said Act has expired
- The taxpayer has received a refund of more than 1 Lacs as an exporter or on account of inverted Duty Structure in the preceding financial year on account of the unutilized input tax credit. Refund under section 54(3)(i) and 54(3)(ii);
- The Registered person has paid at least 1% of the total output tax liability in cash in the current financial year up to the said month, applied cumulatively.
- The registered person is Government Department, PSU, Local Authority, or Statutory Bod
You can refer above notification by clicking the following link
https://www.cbic.gov.in/resources//htdocs-cbec/gst/notfctn-94-central-tax-english-2020.pdf
Post your query on rajnikant@rmpsco.com
