Find
While credit is blocked, tax that it would have covered must be paid in cash. A short cash plan for the block period helps avoid late payment interest.
GST
Managing cash flow when ITC is blocked
Updated . Every paid answer is checked by a CA. Free AI answers are labelled until a CA verifies them.
Provisions
Rule 86A(1), CGST Rules 2017; Sec 50(1), CGST Act 2017
Analysis
Rule 86A can last up to a year, and late payment brings interest under Sec 50(1). Work out the monthly extra cash needed and plan for it. Example: blocked ₹6 lakh, monthly output tax ₹2 lakh of which ₹1.5 lakh was usually set off by credit; you need about ₹1.5 lakh extra cash each month until new credit builds up. Push the representation in parallel.
Close
- Estimate monthly tax payable in cash during the block.
- Arrange working capital or adjust payment terms.
- Pay on time to avoid interest.
- Push for release with evidence.
Connect now
A Savvy replies in minutes.
Fixed price before you pay. Your Savvy is paid only after you accept the work.
General guidance from TaxSavvy’s library of money processes. Laws change; your Savvy confirms the answer on your exact case before anything is filed.