The Central Board of Indirect Taxes and Customs (CBIC) while clearing the misconceptions, in a series of tweets, has said the rule will be applicable to only 0.5% of the total taxpayers base of 1.2 crores.
The CBIC has introduced Rule 86B in GST Rules, to be applicable from January 1, 2021, which restricts use of input tax credit for discharging GST liability to 99%.
The Board has observed that earlier various objections were raised that Rule 86B in respect of the Mandatory 1% Cash Payment will affect a large number of taxpayers.
The CBIC said that the new rule will help control those who issue fake invoices and show high turnovers but have no financial credibility.
The Traders’ body the Confederation of All India Traders (CAIT) also urged Finance Minister Nirmala Sitharaman to defer the implementation of Rule 86B in GST, terming it a “counter-productive” measure that will increase the traders’ compliance burden.
The CBIC said it has booked about 12,000 cases of input tax credit (ITC) fraud and arrested 365 persons in such cases so far. During the last six weeks alone, more than 165 fraudsters have been arrested.
