gst: Businesses with monthly turnover of over Rs 50 lakh to pay at least 1% GST liability in cash

Economy


Businesses
with
monthly
turnover
of
over
Rs
50
lakh will have
to mandatorily
pay
at
least
1 per cent
of their
GST
liability
in
cash, the Finance Ministry said as it moved
to curb evasion by fake invoicing.

The Central Board
of Indirect Taxes and Customs (CBIC) has introduced Rule 86B
in Goods and Services Tax (
GST) rules which restricts use
of input tax credit (ITC) for discharging
GST
liability
to 99 per cent.

“… The registered person shall not use the amount available
in electronic credit ledger
to discharge his
liability towards output tax
in excess
of 99 per cent
of tax
liability,
in cases where the value
of taxable supply …
in a month exceeds
Rs
50
lakh,” the CBIC said.

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While calculating the
turnover threshold, sales from
GST exempt goods and zero rates supply would not be included.

However, this restriction will not apply where the managing director or any partner have paid more than
Rs
1
lakh as income tax or the registered person has received a refund amount
of more than
Rs
1
lakh
in the preceding financial year on account
of unutilised input tax credit.

EY Tax Partner Abhishek Jain said the government has put restrictions on seamless input credit utilisation
with introduction
of Rule 89B, which blocks utilisation
of ITC beyond 99 per cent
of the output
liability, for
businesses having taxable
turnover
of more than
Rs
50
lakh per month.


With the government providing reasonable exceptions
to this rule, the idea remains
to prevent misutilisation
of credit by
businesses taking fake credits,” Jain added.

Further, the CBIC has amended
GST rules restricting filing
of outward supply details
in GSTR-
1 for business that have not paid tax for the past periods by filing GSTR 3B.

So far, until now, non-filing
of GSTR 3B resulted
in blockage
of e-way bill but will now result
in GSTR
1 blockage as well.

Abhishek Jain, Tax Partner, EY said, “The government has now restricted filing
of outward supply details
in GSTR
1 return for
businesses who have not paid tax for the past periods by filing GSTR 3B.

“The government’s idea here seems
to be
to curb input tax credit passing by
businesses which have otherwise not paid their
GST
liability,” Jain added.

AMRG & Associates Senior Partner Rajat Mohan said, “These changes indicate that government is grappling
with lower tax collections and high tax evasions, burden
of which will again be on honest taxpayers”.

The CBIC has also notified authentication
of Aadhaar number or physical verification
of business premises for the purposes
of obtaining
GST registration.

“This amendment has likely been introduced
to prevent fraudulent registrations,” Jain added.

Also, the validity
of electronic way bill provisions has been amended by the CBIC according
to which the e-way bill will be valid for
1 day for every 200 km
of travel, as against 100 km earlier.



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