Answer

1. F

   Facts

   No. Rule 86B limits using ITC to 99 percent of output tax for some businesses with high monthly taxable supplies, so about 1 percent is paid in cash. Rule 86A is an officer's block on suspect credit.

2. P

   Provisions and law

   • Rule 86A(1), CGST Rules 2017Officer not below Assistant Commissioner may disallow debit of ITC, for recorded reasons, to pay any liability or claim any refund, where the credit looks fraudulent or ineligible on listed grounds
   • Rule 86B, CGST Rules 2017Where monthly taxable supplies exceed ₹50 lakh, ITC cannot be used for more than 99 percent of output tax, with listed exceptions
3. A

   Analysis

   Rule 86B applies automatically to a business with taxable supplies over ₹50 lakh in a month, unless an exception applies, such as income tax paid above a limit or refunds received. Rule 86A needs an officer's recorded reasons. Example: output tax ₹10 lakh under Rule 86B means at least ₹10,000 in cash. Check the exceptions with your CA before assuming either rule applies.

4. C

   Conclusion

   1. 1Check whether your monthly taxable supplies exceed ₹50 lakh.
   2. 2Check the Rule 86B exceptions that may apply.
   3. 3Pay the minimum cash portion if Rule 86B applies.
   4. 4Treat any officer block separately under Rule 86A.

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