Text
The text below is the rule as served by the CBIC tax information portal on 17 September 2026, with the portal's own amendment footnote markers (shown as small numerals before a bracket) and its footnotes.[1] The Rules as published in the Gazette of India is the legal source.
Rule 86B, verbatim (show)
Rule 86B
1[Rule 86B. Restrictions on use of amount available in electronic credit ledger.-
Notwithstanding anything contained in these rules, the registered person shall not use the amount available in electronic credit ledger to discharge his liability towards output tax in excess of ninety-nine per cent. of such tax liability, in cases where the value of taxable supply other than exempt supply and zero-rated supply, in a month exceeds fifty lakh rupees:
Provided that the said restriction shall not apply where -
(a) the said person or the proprietor or karta or the managing director or any of its two partners, whole-time Directors, Members of Managing Committee of Associations or Board of Trustees, as the case may be, have paid more than one lakh rupees as income tax under the Income-tax Act, 1961(43 of 1961) in each of the last two financial years for which the time limit to file return of income under subsection (1) of section 139 of the said Act has expired; or
(b) the registered person has received a refund amount of more than one lakh rupees in the preceding financial year on account of unutilised input tax credit under clause (i) of first proviso of sub-section (3) of section 54; or
(c) the registered person has received a refund amount of more than one lakh rupees in the preceding financial year on account of unutilised input tax credit under clause (ii) of first proviso of sub-section (3) of section 54; or
(d) the registered person has discharged his liability towards output tax through the electronic cash ledger for an amount which is in excess of 1% of the total output tax liability, applied cumulatively, upto the said month in the current financial year; or
(e) the registered person is -
(i) Government Department; or
(ii) a Public Sector Undertaking; or
(iii)a local authority; or
(iv) a statutory body:
Provided further that the Commissioner or an officer authorised by him in this behalf may remove the said restriction after such verifications and such safeguards as he may deem fit.]
2[(f) the registered person other than a manufacturer shall be exempted from the provisions of this rule only in respect of goods specified under rule 31D, on which the tax has been paid by the supplier on the basis of retail sale price:]
1. Inserted (w.e.f. 01.01.2021) vide Notification No. 94/2020 - CT dated 22.12.2020.
2. Inserted (w.e.f. 01.02.2026) vide Notification No. 20/2025 - CT dated 31.12.2025.
86B main limbThreshold and credit-use cap
Notwithstanding anything contained in these rulesRule 86B main limb
The monthly threshold excludes exempt and zero rated supply. Where the threshold is exceeded and no exception applies, the stated cap limits credit-ledger discharge of output tax. The rule’s exceptions must be considered before applying that restriction.
Questions to answer on the fileValue of taxable supply in a month exceeds fifty lakh rupees2 questions
Questions to answer on the fileOutput tax discharge within ninety-nine per cent3 questions
86B proviso (a)Income-tax exception
in each of the last two financial years for which the time limit to file return of incomeRule 86B proviso (a)
The listed person or role-based persons must meet the more-than-one-lakh income-tax requirement in each relevant year whose return deadline has expired. The law does not settle how the exact wording determines the required number of partners, directors, committee members or trustees. No assumed count replaces it.
Questions to answer on the fileIncome tax in each of the last two financial years5 questions
Questions to answer on the fileRefund under clause(i) of section 54(3)3 questions
Questions to answer on the fileRefund under clause(ii) of section 54(3)3 questions
Questions to answer on the fileCash discharge cumulatively up to said month4 questions
Questions to answer on the fileGovernment Department or public body4 questions
Questions to answer on the fileNonmanufacturer goods specified under Rule 31D5 questions
86B provisos (b)-(c)Refund exceptions
has received a refund amount of more than one lakh rupees in the preceding financial yearRule 86B provisos (b)-(c)
The separate alternatives concern the specified clauses of the first proviso to section 54(3). Actual receipt in the preceding financial year and the qualifying refund type matter, rather than a refund application alone.
86B proviso (d)Cumulative cash discharge
applied cumulatively, upto the said month in the current financial yearRule 86B proviso (d)
The exception compares output tax discharged through the cash ledger with total output-tax liability cumulatively up to the month. The cash amount must exceed the stated percentage.
86B proviso (e)Public bodies
the registered person is - (i) Government Department; or (ii) a Public Sector Undertaking;Rule 86B proviso (e)
Government Departments, Public Sector Undertakings, local authorities and statutory bodies fall within the stated exception. The person’s status must fit the identified description.
86B further provisoAuthority removal
after such verifications and such safeguards as he may deem fitRule 86B further proviso
The Commissioner or an authorised officer may remove the restriction. The power requires the verifications and safeguards considered fit by that authority.
Questions to answer on the file5 questions
86B proviso (f)Specified retail-price goods
the registered person other than a manufacturer shall be exemptedRule 86B proviso (f)
The exception is limited to goods specified under Rule 31D where the supplier paid tax on retail sale price. It concerns a registered person other than a manufacturer and only those goods.
Frequently asked questions
Does the threshold include zero rated supplies?
The main limb expressly excludes exempt and zero rated supplies from the stated monthly taxable-supply value.
Rule 86B main limb
How many role-holders must meet the income-tax exception?
The law does not settle how the exact partner, director, committee or trustee wording determines the required number. No count is assumed.
Rule 86B proviso (a)
Is the non-manufacturer exception general?
Clause (f) confines it to the specified Rule 31D goods on which the supplier paid tax using retail sale price.
Rule 86B proviso (f)
Amendment history
The CBIC text carries 2 footnotes. The table gives each in the source's own terms. Effective dates are as the footnotes state them.[1]
| Note | Change |
|---|---|
| 1 | Inserted (w.e.f. 01.01.2021) vide Notification No. 94/2020 - CT dated 22.12.2020.[2] |
| 2 | Inserted (w.e.f. 01.02.2026) vide Notification No. 20/2025 - CT dated 31.12.2025.[3] |
Relationship with other provisions
| Provision | Connection | Words that tie them |
|---|---|---|
| Section 54 of the CGST Act, 2017 | this provision requires Section 54 of the CGST Act, 2017 | 86B proviso(b)/(c) "sub-section (3) of section 54" |
| Rule 31D | this provision requires Rule 31D | 86B proviso(f) "goods specified under rule 31D" |
Circulars and notifications
Circulars and notifications in the CBIC repository that cite this rule, newest first, by number, date and subject. A listing here does not say what an instrument decides; read the instrument.
Notifications (3)
| Number | Date | Subject |
|---|---|---|
| Notification No. 20/2025-Central Tax | 31 December 2025 | Seeks to notify Central Goods and Services Tax (Fifth Amendment) Rules, 2025 |
| Notification No. 01/2021-Central Tax | 1 January 2021 | Seeks to make amendment (2021) to CGST Rules, 2017. |
| Notification No. 94/2020-Central Tax | 22 December 2020 | Seeks to make the Fourteenth amendment (2020) to the CGST Rules, 2017. |
Unsettled questions
The words of Rule 86B do not answer this question. Where one decides a matter on the file, the answer depends on the position taken on it.
- How does the required cardinality apply to the selected partnership, director, committee or trustee role under the exact wording any of its two partners, whole-time Directors, Members of Managing Committee of Associations or Board of Trustees? Retain named persons and both years; no count inferred from an entity-level tax flag.
See also
- Section 54 of the CGST Act, 2017: refund of tax
- Rule 31D of the CGST Rules, 2017: value of supply of goods on basis of retail sale price
- Rule 86A of the CGST Rules, 2017: conditions of use of amount available in electronic credit ledger
References
- Central Board of Indirect Taxes and Customs. "Rule 86B. Restrictions on use of amount available in electronic credit ledger". Central Goods and Services Tax Rules, 2017, CBIC tax information portal, with amendment footnotes 1 to 2. Retrieved 17 September 2026.
- Notification No. 94/2020-Central Tax, dated 22 December 2020: Seeks to make the Fourteenth amendment (2020) to the CGST Rules, 2017. Cited in CBIC footnote 1.
- Notification No. 20/2025-Central Tax, dated 31 December 2025: Seeks to notify Central Goods and Services Tax (Fifth Amendment) Rules, 2025. Cited in CBIC footnote 2.
External links
- CGST Rules, 2017, Rule 86B on the CBIC tax information portal