New GST Rules for Input Tax Credit


On 22nd December, 2020 the latest amendment has been made in the CGST Rules, 2017 vide notification no. 94/2020-Central Tax.

Amongst the various changes made, a new Rule 86B (Restriction on use of Input Tax Credit for discharging the output liability) has been inserted.

As per the new rule 86B the tax payer has to mandatorily pay at least 1% of tax liability through ‘cash ledger’ if monthly taxable supply exceeds Rs 50 lakhs. However, it is not applicable to Government departments, Public Sector Undertakings (PSU), local authorities and statutory bodies.

Further, amendment in GST 36(4) CGST Rules, 2017 is made. Accordingly, the provisional tax credit restricted to 5% instead of 10% of eligible ITC reflected in the GSTR-2A.

The said Rule will be effective from 1st January 2021.

Click here for detailed official notification:

Knowledge Source:

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