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Export revenue likely to be exempted from new GST new rule

CBIC on December 24 notified certain changes to the GST rules, asking businesses with a monthly turnover of over Rs 50 lakh to mandatorily pay at least 1 per cent of their GST liability in cash

twitter-logoBusinessToday.In | December 27, 2020 | Updated 16:13 IST
Export revenue likely to be exempted from new GST new rule
Revenue generated from items that are exempted under the GST may also remain out of the new rule

Revenue generated from exporters will not come under the new Goods and Services Tax (GST) rule that mandates businesses with a monthly turnover of over Rs 50 lakh to pay at least 1 per cent of their GST liability in cash. The government move is aimed at stopping businesses and taxpayers from meeting tax liability via tax credits.

Apart from exports, revenue generated from items that are exempted under the GST will also remain out of the new rule, a finance ministry official told LiveMint, adding that these deductions will be done while computing Rs 50 lakh threshold each month.

Objections have been raised that the new GST rule will affect a large number of taxpayers. 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. But the Centre says the new rule will be applicable to only 0.5 per cent (around 40,000-45,000) of the total taxpayers base of 1.2 crore.

As per the government, the new rule will act as a deterrent against fraudsters and help control those who issue fake invoices and show high turnovers.

The Centre has also said the cash payment of 1 per cent will be calculated on the tax liability in a month and the turnover of the respective month, and that it'll not lead to financial burden on businesses.

Notably, to curb evasion by fake invoicing, the CBIC on December 24 notified certain changes to the GST rules, asking businesses with a monthly turnover of over Rs 50 lakh to mandatorily pay at least 1 per cent of their GST liability in cash. The CBIC introduced Rule 86B in GST Rules, to be applicable from January 1, which restricts the use of input tax credit for discharging GST liability to 99 per cent.

Also read: Businesses having over Rs 50 lakh monthly turnover to pay minimum 1% GST liability in cash

Also read:CAIT urges FM to postpone rollout of Rule 86B in GST; terms it 'counter productive'

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