Small businesses and dealers will not be impacted by the new government rule of paying at least 1 per cent of GST liability in cash as only entities with annual turnover of Rs 6 crore and above are required to follow the new rule, Finance Ministry sources said.
After unearthing rampant use of fake invoices to evade goods and services tax (GST), the Central Board of Indirect Taxes and Customs (CBIC) had last week amended rules to make it mandatory for businesses with monthly turnover of over Rs 50 lakh to pay at least 1 per cent of their GST liability in cash.
Sources said the rule applies only to about 45,000 taxpayers out of the GST taxpayer base of 1.2 crore and genuine dealers and businesses would not be impacted.
The new rule, they said, has been brought to check use of fake invoices to claim credit for tax paid on non-existent or highly inflated input cost.
The new rule restricts the use of input tax credit (ITC) for discharging GST liability to 99 per cent, effective January 1, 2021.
The sources added that