In letter to finance minister, GST council, traders insist to modify new GST notification

In a memorandum, the Federation of All India Vyapar Mandal  (a national body of small traders advocating for a single-point GST collection) has requested both the Finance Minister and the Goods and Goods and Services Tax (GST) Council for certain changes in the recently issued GST notification. The trading community has also asked them  to withdraw certain provisions of the new GST notification on December 22.

In the new notification issued a few days ago, the government had notified certain changes to the GST Rules and some of the rules are set to be applicable from January 1 next year.

“Scrap Rules 86B and 36(4), to be effective from 1st January 2021. These provisions are against the fundamental spirit of GST as it obstructs seamless input tax credit,” general secretary of the Federation V K Bansal said.

The Central Board of Indirect Taxes and Customs (CBIC) has introduced Rule 86B in GST Rules to be applicable from January 1, 2021 which will restrict the use of input tax credit for discharging GST liability to 99 per cent.

This means businesses with monthly turnover of over Rs 50 lakh will have to mandatorily pay at least 1 per cent of their GST liability in cash, the letter to the minister read. Rule 36(4) restricts claim of Input Tax Credit (ITC) in respect of invoices/debit notes not furnished by the suppliers which has now been reduced from 10 per cent to 5 per cent of the credit available in GSTR 2B.