Answer

1. F

   Facts

   Under Rule 86B, certain registered persons whose taxable supply value in a month is above Rs 50 lakh cannot use credit for more than 99 percent of output tax. At least 1 percent must be paid in cash, unless an exception applies.

2. P

   Provisions and law

   • Rule 86B, CGST Rules 2017Certain registered persons with monthly taxable supplies above Rs 50 lakh must pay at least 1 percent of output tax in cash
   • Sec 49(4), CGST Act 2017Electronic credit ledger can be used only to pay output tax, not interest, penalty, fee or reverse charge tax
3. A

   Analysis

   Exceptions include persons who paid more than Rs 1 lakh income tax in each of the last two years, exporters with refunds above Rs 1 lakh, and persons who have paid 1 percent cumulative tax in cash. Example: output tax Rs 10 lakh, ITC Rs 12 lakh; without an exception you pay at least Rs 10,000 in cash. Check the full list of exceptions each year.

4. C

   Conclusion

   1. 1Check monthly taxable supplies against Rs 50 lakh
   2. 2Check if any Rule 86B exception applies
   3. 3If not, pay at least 1 percent of output tax in cash
   4. 4Keep proof of exception if you rely on one

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