Compliance Club

16/04/2026

📌 1% Cash Payment Rule in GST (Rule 86B)

The 1% cash rule under GST comes from Rule 86B GST, introduced by the government to curb fake invoicing and ITC misuse.

🔍 What does the rule say?
👉 If your monthly taxable turnover exceeds ₹50 lakh, then:
➡️ You cannot use ITC fully to pay GST liability
➡️ You must pay at least 1% of output tax liability in cash

🧾 Simple Example
Output GST liability = ₹10,00,000
ITC available = ₹10,00,000
👉 Normally: Pay full via ITC
👉 Under Rule 86B:
Minimum ₹10,000 (1%) must be paid in cash
Remaining ₹9,90,000 via ITC

🚫 When Rule 86B does NOT apply (Exceptions)
You are exempt from 1% rule if ANY of these apply:
✔️ Income tax paid > ₹1 lakh in last 2 years (by proprietor/partner/director)
✔️ Received refund > ₹1 lakh in preceding FY (ITC or export refund)
✔️ Output tax already paid in cash ≥ 1% cumulatively
✔️ Government department / PSU / local authority
✔️ Registered person is exempted by Commissioner

⚠️ Important Points
Applies per GSTIN, not PAN level
Checked monthly (turnover > ₹50 lakh in a month)
Only for taxable supplies (not exempt/export without tax)

🎯 Practical Insight (Very Important)

👉 This rule mainly targets:
Fake billing businesses
High ITC claim without real transactions

👉 Genuine businesses usually fall under exemptions.

16/04/2026

01/04/2026

GST input tax credit..

30/03/2026

🚨 Important Update for Directors by the Ministry of Corporate Affairs (MCA)

DIR-3 KYC compliance just got easier!

✔️ Now required only once every 3 years (instead of every year)
✔️ Due date: On or before 30th June of the relevant year
✔️ Any change in mobile/email/address → update within 30 days
✔️ DIR-3 KYC & Web merged into a single DIR-3 KYC Web form

📌 Effective from: 31 March 2026

💡 Example:
*If DIN is allotted in FY 2025-26 → First KYC due between Apr–Jun 2029 If already filed for FY 2025-26 → Next due in Apr–Jun 2028 (if no changes)*

A big step towards ease of doing business & reduced compliance burden 👏

30/03/2026

New PAN application Rules

30/03/2026

FSSAI New turnover limit.....

18/03/2026

GST Return Forms

Know Which Form to File & Why!

17/03/2026

Here's a clean summary of the 10 types of Income that are Tax Free in India, along with key conditions you should be aware of (important for Compliance and Planning):

1) Agriculture Income
Fully Tax-free under Section 10(1)
However, it is considered for rate calculation if non-agricultural income exceeds basic exemption limit (Partial Integration Concept).

2) PPF Returns - Public Provident Fund Scheme: Public Provident Fund
EEE status (Exempt-Exempt-Exempt)
Investment limit: ₹ 1.5 lakh/year
Interest+ maturity: Fully tax-free

3) EPF withdrawal scheme: Employees' Provident Fund Organisation (EPFO)
Withdrawal tax-free after 5 years of continuous service
Earlier withdrawal may attract tax (with exceptions).

4) Life Insurance Maturity Proceeds
Policy governed under Section 10(10D)
Tax-free if premium

16/03/2026

GST Compliance CheckList
Before 31/03/2026

07/03/2026

Reverse Charge Mechanism (RCM) on Services under GST

Under the Central Goods and Services Tax Act, 2017, Reverse Charge Mechanism (RCM) means the recipient of goods or services pays GST instead of the supplier.

This provision is mainly covered under:

Section 9(3) – Specific goods/services notified by government

Section 9(4) – Purchases from unregistered suppliers (limited applicability)

Most RCM services are notified through Notification No. 13/2017-Central Tax (Rate).

1️⃣ Goods Transport Agency (GTA)

Service: Transportation of goods by road by a GTA.

RCM Applicable When Recipient Is:

Factory registered under Factories Act

Society registered under Societies Registration Act

Co-operative society

Registered GST person

Body corporate

Partnership firm

GST Rate

5% without ITC (generally under RCM)

Example
A company hires a GTA for transporting goods worth ₹50,000.
➡ The company (recipient) pays GST under RCM.

2️⃣ Legal Services

Service: Legal services provided by:

Individual advocate

Senior advocate

Firm of advocates

RCM Applicable To

Business entity located in taxable territory

Example
A company hires an advocate for legal consultation.
➡ Company pays GST under RCM.

3️⃣ Arbitral Tribunal Services

Service: Services provided by an arbitral tribunal.

RCM Applicable To

Business entity receiving the service.

Example
If a company appoints an arbitral tribunal for dispute resolution → company pays GST.

4️⃣ Sponsorship Services

Service: Sponsorship of events, sports, shows etc.

RCM Applicable To

Body corporate

Partnership firm

Example
If a company sponsors a cricket tournament → company pays GST under RCM.

5️⃣ Services by Government / Local Authority

Service: Services supplied by:

Central Government

State Government

Union Territory

Local authority

RCM Applicable To

Business entity receiving service

Not Covered (Normal GST applies)

Renting of immovable property

Speed post / life insurance / express parcel

Services related to aircraft or vessel

Example
If municipality provides testing services to a company → company pays GST under RCM.

6️⃣ Director Services

Service: Services provided by a director to a company.

RCM Applicable To

Company / body corporate

Example
Director receives sitting fees.
➡ Company must pay GST under RCM.

7️⃣ Insurance Agent Services

Service: Services by insurance agent to insurance company.

RCM Applicable To

Insurance company

Example
Insurance agent earns commission.
➡ Insurance company pays GST under RCM.

8️⃣ Recovery Agent Services

Service: Recovery agent services to:

Bank

Financial institution

NBFC

➡ Bank / FI pays GST under RCM.

9️⃣ Copyright Services

Service: Transfer or permitting use of copyright in:

Literary work

Musical work

Artistic work

RCM Applicable To

Publisher

Music company

Producer

🔟 Security Services

Service: Security services (security guards etc.)

RCM Applicable When

Supplier is not a body corporate

Recipient is registered person

➡ Recipient pays GST under RCM.

Exception

If recipient is government department registered only for TDS.

1️⃣1️⃣ Renting of Motor Vehicle

Service: Renting motor vehicle designed to carry passengers.

RCM Applicable When

Supplier charges 5% GST without ITC

Service provided to body corporate

➡ Body corporate pays GST under RCM.

1️⃣2️⃣ Author / Music Composer / Photographer Services

Services provided to:

Publisher

Music company

Producer

➡ Recipient pays GST under RCM.

Important Compliance under RCM
1️⃣ Payment in Cash

GST under RCM must be paid in cash through electronic cash ledger.

2️⃣ Input Tax Credit (ITC)

After paying GST under RCM:
✔ ITC can be claimed in same return if used for business.

3️⃣ Self-Invoice

If supplier is unregistered, recipient must issue self-invoice.

4️⃣ Time of Supply

For services under RCM:
Earliest of:

Date of payment

60 days from invoice date

✅ Practical Tip for Tax Professionals:
Most common RCM entries in GST returns are:

GTA

Director remuneration

Legal fees

Security services

25/02/2026

MCA Update:Big Relief
MCA has introduced CCFS-2026 via circular dated 24 Feb 2026.
• Scheme period: 15 Apr 2026 – 15 Jul 2026.
• Companies can file pending annual returns & financial statements with only 10% of additional fees.
• Option to declare Dormant Company (MSC-1) at 50% fee.
• Strike off (STK-2) allowed with 25% of filing fee.
• Immunity from penalties under sections 92 & 137 if filings are completed during the scheme.