GST Rule 86B, effective January 1, 2021, mandates that registered taxpayers with a monthly taxable turnover exceeding ₹50 lakhs (excluding exempt/zero-rated supplies) must pay at least 1% of their total output GST liability in cash, rather than using Input Tax Credit (ITC). It limits ITC usage to 99% of the liability to curb fraudulent ITC claims.
✔ If monthly taxable turnover > ₹50 lakh (excluding exempt and zero-rated supplies), ✔ Minimum 1% of GST liability must be paid in cash, ✔ The remaining 99% may be paid through ITC. Applicable to registered persons under GST whose monthly taxable supply exceeds ₹50 lakh.
The New GST Rate Structure
The old four-slab structure (5%, 12%, 18%, 28%) has been simplified. The 12% and 28% slabs were eliminated and replaced with a new structure, which is now primarily 0%, 5%, 18%, and a 40% rate for luxury and “sin” goods.
Manufacturers and traders typically have a GST Composition Scheme rate of 1% of turnover. Restaurants and service providers under the Composition Scheme usually face a rate of 5% of turnover. Participants in the scheme cannot claim Input Tax Credit (ITC) on their purchases.
CGST Rule 42 deals with the reversal of ITC on inputs and input services, whereas rule 43 deals with the reversal of ITC on capital goods.
Rule 37. Mandates ITC reversal if payment to suppliers is not made within 180 days from the invoice date. Relevant Section. Second proviso to Section 16(2) of the CGST Act.
Every registered person who has made outward supplies in the period between the date on which he became liable to registration till the date on which registration has been granted shall declare the same in the first return furnished by him after grant of registration.
Merchant exporters can obtain goods from a manufacturer at a concessional GST rate of 0.1% for export. Deemed Exporter: This refers to a person who supplies goods that do not leave India but are notified as deemed exports under section 147 of the CGST Act.
The rationale for introducing this rule
To curb tax evasion by issuing fake invoices, the Central Board of Indirect Taxes and Customs (CBIC) had made it mandatory for taxpayers to have a monthly turnover of more than Rs 50 lakh to pay 1% of their GST liability in cash.
Form GSTR-1 is a monthly/quarterly Statement of Outward Supplies to be furnished by all normal and casual registered taxpayers making outward supplies of goods and services or both and contains details of outward supplies of goods and services.
GST Updates & Amendments in 2025: Key Changes to Know
One of the key GST updates under 2.0 reform is that it simplified the GST tax structure from a 4-slab (5%, 12%, 18% and 28%) to a 3-slab (5%, 18% and 40%). GST Council, however, meets every quarter to improve the system.
Using the wrong tax codes or accounting method
Many GST mistakes are the result of using incorrect tax codes or the wrong accounting method: Tax codes: If a GST-free sale is coded as taxable in your accounting system, you'll pay GST unnecessarily. If a taxable sale is coded GST-free, you'll underpay.
Types of GST in India
CGST (Central Goods and Services Tax) SGST (State Goods and Services. IGST (Integrated Goods and Services Tax) UTGST (Union Territory Goods and Services Tax)
Subtracting GST from Price
To calculate how much GST was included in the price, divide the total price by 11 ($1000∕11=$90.91). To calculate the price without GST, divide the price by 1.1 ($1000∕1.1=$909.09).
GST is leviable only if aggregate turnover is more than 20 lacs. (Rs. 10 lacs in 11 special category States). For computing aggregate supplies turnover of all supplies made by you would be added.
India's GST regime is undergoing a landmark transformation with the 56th GST Council meeting unveiling GST 2.0 - next-generation reforms simplifying tax slabs to 5%, 18%, and 40%. Effective from September 22, 2025, these reforms aim to ease compliance, boost consumption, and fuel economic growth.
The following category of tax persons are exempted from payment of 1% of GST in Cash 1. Registered taxpayers who have paid income tax above Rs 1.00 in Income Tax during the last two years continuously 2. Taxpayers who have zero-rated supplies without payment of duty and claimed refund of more than Rs 1.00 lac 3.
Persons required to comply with Rule 86B
Registered persons whose monthly taxable turnover exceeds ₹50 lakhs (excluding exempt and zero-rated supplies) are required to pay at least 1% of their GST liability in cash, subject to certain exceptions.
Working backwards to find the GST and GST exclusive amounts from the total GST inclusive price. To work out the GST exclusive amount simply subtract the GST from the GST inclusive amount to get the original GST exclusive cost.
Detailed steps for making this payment are given below:
The "deemed export" regulation states that a transfer of "technology" (EAR term) or "technical data" (ITAR term) to the foreign person is "deemed" to be an export to the home country of the foreign person.
The De Minimis Rule determines whether businesses can claim input tax on exempt supplies. It applies only if the exempt supplies meet these conditions: The monthly average of exempt supplies is $40,000 or less, AND. The value of exempt supplies is 5% or less of total taxable and exempt supplies for that period.
Section 69 of CGST Act, 2017 : Section 69: Power To Arrest
(a) where a person is arrested under sub-section (1) for any offence specified under sub-section (4) of section 132, he shall be admitted to bail or in default of bail, forwarded to the custody of the Magistrate; (b) in the case of a non-cognizable and.
To every person who supplies goods and/or services of value exceeding Rs 20 lakh in a financial year. (Limit is Rs 10 lakh for some special category states). Compulsory registration for these. And GST must be paid when turnover exceeds Rs 20 lakh (Rs 10 lakh for some special category states).
Businesses must register for GST if their turnover exceeds ₹40 lakh, ₹20 lakh, or ₹10 lakh, depending on the supply and state/UT, and for specific categories like e-commerce sellers. GST simplifies the tax structure by eliminating cascading taxes and consolidating multiple indirect taxes into one.