The CBIC has notified Central Goods and Services Tax (Fourteenth Amendment) Rules, 2020 which seeks to amend Central Goods and Services Tax Rules, 2017 vide Notification No. 94/2020 dated 22/12/2020.
The said Rules have laid out new rule restricting the use of ITC for discharging the Output Tax liability. It has also amended the Rule 36(4).
The taxpayer has to mandatorily pay at least 1% of his liability through cash ledger if monthly taxable supply (other than exempt supply and zero-rated supply) exceeds 50 Lakhs.
In other words, the registered person shall not use the amount available in electronic credit ledger to discharge his liability towards output tax in excess of ninety-nine per cent.
It may be pertinent to note that Rule 86B doesn't applies to following categories of taxable person:
a. Government department,
b. Public Sector undertaking,
c. Local authority,
d. Statutory body.
The restriction shall also not apply in following cases:
a. Taxpayer has paid Income Tax exceeding Rs. 1 lakh in two preceding financial years.
b. Taxpayer has received refund under Section 54 exceeding Rs. 1 lakh in preceding financial year.
c. Taxpayer has paid outward tax liability in cash which cumulatively exceeds 1 % of total output tax liability for the financial year till date.
Provided further that the Commissioner or an officer authorised by him in this behalf may remove the said restriction after such verifications and such safeguards as he may deem fit.
Update : Section 16(2)(aa) has been notified and now ITC cannot be availed beyond GSTR-2A/2B (Applicable from 01/01/2022)
Read more here : https://taxninja.in/blog/section-162aa-notified-itc-cannot-be-availed-beyond-gstr-2a-2b
Pre - Amendment Rule 36(4):
Input tax credit to be availed by a registered person in respect of invoices or debit notes, the details of which have not been uploaded by the suppliers under sub-section (1) of section 37, shall not exceed [10 per cent] of the eligible credit available in respect of invoices or debit notes the details of which have been uploaded by the suppliers under sub-section (1) of section 37.
Post - Amendment Rule 36(4):
Input tax credit to be availed by a registered person in respect of invoices or debit notes, the details of which have not been furnished in FORM GSTR-1 or using the invoice furnishing facility, shall not exceed [5 per cent] of the eligible credit available in respect of invoices or debit notes the details of which have been furnished in FORM GSTR-1 or using the invoice furnishing facility.
Recommended Read: Highlights of Significant Changes in GST Rules - Central Goods and Services Tax (Fourteenth Amendment) Rules, 2020
This Article was authored by Tushant a passionate blogger by .
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