"Rule 86B of the CGST Rules, 2017 impose restrictions on the use of amount available in Electronic Credit Ledger if the value of taxable supply is…

As per rule 86B of the CGST Rules, 2017, a registered person cannot use ITC to discharge the output tax liability in excess of 99% of such tax liability. Thus, amount available in electronic credit ledger shall be utilized only to the extent of 99% of the output tax liability while discharging such tax liability. Minimum 1% of the output tax liability needs to be discharged from electronic cash ledger. Exceptions to rule 86B are as under:- (1) Payment of income tax of more than 1lakh has been made in each of the last two FYs for which the time limit to file original income tax return has expired. (2) Receipt of Refund of ITC of more than 1lakh in the preceding FY on account of unutilized ITC. (3) Payment of output tax liability through electronic cash ledger in excess of 1% of total output tax liability, applied cumulatively, upto the said month in the current FY. (4) Specified registered persons (Government Department; or a Public Sector Undertaking; or a local authority; or a statutory body).