Dispelling the air around “misconceptions” about the recently amended Goods and Services Tax (GST) rules, the Central Council for Indirect Taxes and Customs (CBIC), in a series of tweets, said the rule would only apply to 0.5% of the total taxpayer base of 1.2 crore. Some had previously raised objections that this rule would affect a large number of taxpayers.
The traders’ body, the Confederation of All Indian Traders (CAIT), also urged Finance Minister Nirmala Sitharaman to postpone the implementation of GST rule 86B, calling it a “counterproductive measure. “which will increase the compliance burden on traders.
“The rule clearly identifies places where the risk to income is high and deters fraudsters in multi-level fraud of passing bogus ITCs,” said the nodal national agency responsible for customs administration and enforcement. GST. He added that the rule will help control those who issue bogus invoices and show high turnover but have no financial credibility and flee after abusing ITC without paying cash tax.
Also read: Businesses with monthly turnover over Rs 50 lakh must pay at least 1% GST in cash
On speculation that this would place a huge burden on small businesses by increasing their need for working capital, CBIC said the 1% cash payment should be calculated on the tax payable in a month. and the turnover for the respective month. âIn fact, this is only 0.01 percent of revenue,â CBIC said.
He clarified that the rule does not apply to micro and small businesses and composition traders. “The new provision which restricts the use of ITCs to discharge production responsibility is applicable to the registered person whose value of the taxable supply other than the exempt supply and export during one month exceeds Rs 50 lakh – that is to say those whose annual turnover is greater than Rs 6 crores “, he added.
The CBIC said the rule only applies to those whose value of the taxable supply, other than the exempt supply and export, exceeds Rs 50 lakh or Rs 6 crore in one year.
In particular, to fight against evasion by false invoices, on December 24, the CBIC notified certain changes to the GST rules, asking companies with a monthly turnover exceeding Rs 50 lakh to pay obligatorily at least 1% of their GST cash liability.
The CBIC introduced Rule 86B into the GST rules, applicable from January 1, which limits the use of the input tax credit for payment of the GST to 99%.
However, this restriction will not apply when the Managing Director or any partner has paid more than Rs 1 lakh as income tax or the registered person has received a refund amount greater than Rs 1 lakh in the course of previous fiscal year due to unused input. tax credit.
Read also : CAIT urges FM to postpone deployment of GST rule 86B; terms it is counterproductivee ‘