GST
Checking suppliers to avoid a Rule 86A block
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Facts
Most blocks start with a bad supplier. Simple checks before buying, and paying within 180 days through the bank, lower the risk a lot.
Provisions and law
- Sec 16(2), CGST Act 2017ITC needs a tax invoice, receipt of goods or services, tax actually paid by the supplier and the recipient's return
- Rule 86A(1), CGST Rules 2017Commissioner or authorised officer, not below Assistant Commissioner, may disallow debit of ITC for recorded reasons where the supplier or recipient is non-existent, goods were not received, tax was not paid or there is no valid document
Analysis
Sec 16(2) conditions and Rule 86A grounds both turn on the supplier being real and paying tax. Before buying, search the GSTIN for active status, filing history and address, and visit if the amount is large. After buying, check that invoices appear in GSTR-2B and that the supplier keeps filing GSTR-3B. Red flags: new GSTIN, no filing history, prices below market, insistence on cash or third-party payments.
Conclusion
- Search each new supplier's GSTIN for status and return filing.
- Keep PAN, address proof and a photo of the premises on file.
- Pay only by bank to the supplier's own account.
- Match invoices to GSTR-2B every month.
- Stop buying from suppliers who stop filing.
A Savvy can do this for you
Credit ledger blocked under Rule 86A: representation and unblocking
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