As per rule 86B of Cgst Act 1% Cash payment of Output tax is mandatory for persons having monthly turnover exceeding 50 Lacs. One of our client is start up Company and it has Input Credit exceeding 10 Crores available on gst portal and as per monetary threshold this rule is applicable to it. then please suggest do we need to pay 1% in cash despite we have so much of credit available. if not liable to pay then please indicate relevent clause or provide any other solution that you can suggest to avoid these payments.

Reply—Rule 86B is applicable from 1st January 2021 wherein restriction has been placed on setting off more than 99% of tax liability from Input tax credit where the value of taxable supplies other than exempt supply and zero rated supply exceeds Rs. 50 lakhs in a month. Few exceptions have been provided to this rule which is as follows:

• Where the taxpayer has paid Income Tax exceeding Rs. 1 lakh in two preceding financial year.
• Where taxpayer has received refund exceeding Rs. 1 lakhs u/s 54 of CGST Act 2017.
• Where taxpayer has used electronic cash ledger to pay off liability on outward supplies which cumulatively makes 1% of the total liability up to the said month.
• Where a person is a Government Department, Public Sector Undertaking (PSU), local authority or a statutory body.

If you do not fall under any of the above exceptions, payment of tax need to be made in accordance with Rule 86B of CGST Rules. Having enough amount in electronic cerdit ledger is not an exception to said rule.