Payment of 1% GST in cash only for 45,000 taxpayers: DoR sources
Based on the recommendations of the GST Law Committee, the government has notified new indirect tax rules that makes cash payment of 1% of GST tax liability mandatory for businesses whose taxable supply value exceeds ₹50 lakh. This change will come into effect from January 1, 2021.
Sources in department of revenue said data indicated out of the total GST tax base of 1.2 crore taxpayers only around 4 lakh taxpayers have supply value greater than ₹50 lakh, and only around 1.5 lakh out of these 4 lakh taxpayers pay less than 1% tax in cash. So, the changes would include only a small section of taxpayers.
"The data clearly indicates that a small fraction of taxpayers would need to pay 1% of GST liability in cash. Moreover, the rule is clearly for businesses whose taxable value of supply exceeds ₹50 lakh, so the measure would not affect small businesses or increase their working capital requirement," sources said.
Under the new rule cash payment of 1% is to be calculated on the tax liability in a month and not turnover of the month. For example, if the turnover of taxable supplies of a taxpayer is ₹100 in a month and he is required to pay GST of 12% on his output taxable supplies, then he will be required to pay 1% of ₹12, i.e., ₹0.12 (12 paisa) only in the month through cash under this rule.
The rule clearly identifies where the risk to revenue is high and imposes very reasonable cost to deter the fraudsters in a multi-layered fraud of ITC, said the sources.
The government had notified the cash rule to curb fake ITC availment and passing on of such credit by unscrupulous persons who generally pay no tax in cash, particularly in those risky cases where GST turnover does not match with the income tax returns. Such registered person will not be able to use the amount of ITC available in electronic credit ledger to discharge his liability towards output tax in excess of 99% of such tax liability. At least 1% liability would need to be discharged in cash.
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