Alert! Around 45K Entities To Come Under Mandatory 1% Cash Payment Of GST Liability Ambit

The new rule restricts the use of input tax credit (ITC) for discharging GST liability to 99 per cent effective January 1, 2021.

(Representative Image/ Getty)

New Delhi: Revenue department sources on Saturday said that from January 1 it will become mandatory for GST registered entities to pay one per cent of the GST liability in cash, which will be applicable to 45,000 taxpayers and in which only 0.37 per cent of the business have been registered. Earlier this week, the Central Board of Indirect Taxes and Customs (CBIC) in order to curb tax evasions by fake invoicing amended GST rules making it mandatory for businesses with a turnover of more than Rs 50 lakh to pay 1 per cent of their GST liability in cash. The new rule restricts the use of input tax credit (ITC) for discharging GST liability to 99 per cent effective January 1, 2021. However, in cases where the managing director or any partner of the firm 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 unutilized input tax credit the new rule will not be applicable. According to sources, the data analysis reviled that out of the total GST taxpayer base of 1.2 crores in the country, only 4 lakh taxpayers come under the umbrella of having a turnover of more than Rs 50 lakh per month. When further zoomed into the data of these 4 lakh taxpayers, only about 1.5 lakh taxpayers pay less than 1 per cent of their GST liability in cash. “Now, when the exclusions in the rule are applied, then around 1.05 lakh taxpayers get further excluded from these 1.5 lakh taxpayers. Thus, the rule would apply only to approx. 40,000 to 45,000 taxpayers. This would be around 0.37 per cent of the total GST tax base of 1.2 crore taxpayers,” sources said. Sources have also claimed that the rules have been amended to curb the menace of GST fake invoice frauds and fake firms/devious fly-by-night operators who avail and pass on input tax credit (ITC) wrongfully. During the last six weeks, the CBIC has arrested more than 165 fraudsters for various financial crimes. The agency has till now booked about 12,000 cases of ITC fraud and arrested more than 365 peoples.