{"id":17632,"date":"2021-10-16T12:19:21","date_gmt":"2021-10-16T06:49:21","guid":{"rendered":"https:\/\/carajput.com\/blog\/?p=17632"},"modified":"2026-01-23T01:09:06","modified_gmt":"2026-01-22T19:39:06","slug":"all-about-new-rule-86a-of-the-cgst-rules","status":"publish","type":"post","link":"https:\/\/carajput.com\/blog\/all-about-new-rule-86a-of-the-cgst-rules\/","title":{"rendered":"All about new Rule 86A of the CGST Rules"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_58 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Page Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-69d1722c33d95\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #000000;color:#000000\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #000000;color:#000000\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69d1722c33d95\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/carajput.com\/blog\/all-about-new-rule-86a-of-the-cgst-rules\/#About_the_New_Rule_86A_of_the_CGST_Rules\" title=\"About the New Rule 86A of the CGST Rules \">About the New Rule 86A of the CGST Rules <\/a><ul class='ez-toc-list-level-3'><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/carajput.com\/blog\/all-about-new-rule-86a-of-the-cgst-rules\/#Rule_86A_of_CGST_Rules-_Blockage_of_ITC\" title=\"Rule 86A of CGST Rules- Blockage of ITC\">Rule 86A of CGST Rules- Blockage of ITC<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/carajput.com\/blog\/all-about-new-rule-86a-of-the-cgst-rules\/#What_must_you_know_about_Rule_86A_of_CGST_Rules\" title=\"What must you know about Rule 86A of CGST Rules?\">What must you know about Rule 86A of CGST Rules?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/carajput.com\/blog\/all-about-new-rule-86a-of-the-cgst-rules\/#When_will_the_GST_blocking_of_Input_Tax_Credits_cease\" title=\"When will the GST blocking of Input Tax Credits cease?\">When will the GST blocking of Input Tax Credits cease?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/carajput.com\/blog\/all-about-new-rule-86a-of-the-cgst-rules\/#Ripe_for_Constitutional_Challenge-_Rule_86A_of_the_CGST_Rules\" title=\"Ripe for Constitutional Challenge- Rule 86A of the CGST Rules\">Ripe for Constitutional Challenge- Rule 86A of the CGST Rules<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/carajput.com\/blog\/all-about-new-rule-86a-of-the-cgst-rules\/#Tell_me_what_happened\" title=\"Tell me what happened\">Tell me what happened<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/carajput.com\/blog\/all-about-new-rule-86a-of-the-cgst-rules\/#When_the_this_backtrack_on_Input_tax_credit_blocked_under_Rule_86A_happened\" title=\"When the this backtrack on Input tax credit blocked under Rule 86A happened \">When the this backtrack on Input tax credit blocked under Rule 86A happened <\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/carajput.com\/blog\/all-about-new-rule-86a-of-the-cgst-rules\/#BOMBAY_HIGH_COURT_%E2%80%93_Rulings_on_Rule_86A\" title=\"BOMBAY HIGH COURT &#8211; Rulings on Rule 86A\">BOMBAY HIGH COURT &#8211; Rulings on Rule 86A<\/a><ul class='ez-toc-list-level-3'><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/carajput.com\/blog\/all-about-new-rule-86a-of-the-cgst-rules\/#Blocking_of_Electronic_Credit_Ledger_under_GST_%E2%80%93_Judgement_on_Rule_86A\" title=\"Blocking of Electronic Credit Ledger under GST &#8211; Judgement on Rule 86A\">Blocking of Electronic Credit Ledger under GST &#8211; Judgement on Rule 86A<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/carajput.com\/blog\/all-about-new-rule-86a-of-the-cgst-rules\/#Electronic_credit_ledger_was_ordered_to_be_unblocked_by_the_BOMBAY_HIGH_COURT_on_the_reasons_listed_below\" title=\"Electronic credit ledger was ordered to be unblocked by the BOMBAY HIGH COURT on the reasons listed below: \">Electronic credit ledger was ordered to be unblocked by the BOMBAY HIGH COURT on the reasons listed below: <\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<p><img loading=\"lazy\" decoding=\"async\" class=\" wp-image-17633\" src=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2021\/10\/Rule-86A-of-the-CGST-Rules1-300x149.jpg\" alt=\"Rule 86A of the CGST Rules\" width=\"826\" height=\"410\" srcset=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2021\/10\/Rule-86A-of-the-CGST-Rules1-300x149.jpg 300w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2021\/10\/Rule-86A-of-the-CGST-Rules1-768x380.jpg 768w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2021\/10\/Rule-86A-of-the-CGST-Rules1-800x396.jpg 800w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2021\/10\/Rule-86A-of-the-CGST-Rules1.jpg 860w\" sizes=\"(max-width: 826px) 100vw, 826px\" \/><\/p>\n<h2><span class=\"ez-toc-section\" id=\"About_the_New_Rule_86A_of_the_CGST_Rules\"><\/span><span style=\"color: #ff0000;\"><strong>About the New Rule 86A of the CGST Rules <\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Rule 86A of the CGST Rules was introduced to block fraudulently availed Input tax credit. As per this Rule, any officer authorised or a commissioner by himself can block the Input tax credit available in the electronic credit ledger of the taxpayer if they has \u2018reasons to believe\u2019 that the Assessee has fraudulently availed Input tax credit\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0(by the Govt vide Notification no. 75\/2019 dated 26.12.2019)<\/p>\n<p>Here are some situations where Rule 86A of the <a href=\"https:\/\/www.caindelhiindia.com\/blog\/re-availment-of-input-tax-credit-reversed\/\">CGST Rules<\/a> can be invoked &#8211;<\/p>\n<ul>\n<li>Tax invoice has been issued by a GST registered person who is found to be non-existent.<\/li>\n<li>Input tax credit is availed on an invoice on which tax has not been paid to the Govt.<\/li>\n<\/ul>\n<p>GST Registered person does not have the invoice or debit note basis which he is claiming Input tax credit.<\/p>\n<p><span style=\"color: #000000;\"><strong>Rule 86A of the CGST Rules <\/strong>itself has been a matter of great concern amongst assessees, who are worried about its over-reach.<\/span><\/p>\n<ul>\n<li>Read also : <a href=\"https:\/\/carajput.com\/blog\/corporate-and-professional-updates-on-14th-august-2019\/\">All about the Input tax credit\u00a0<\/a><\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"Rule_86A_of_CGST_Rules-_Blockage_of_ITC\"><\/span><span style=\"color: #000080;\"><strong>Rule 86A of CGST Rules- Blockage of ITC<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><img loading=\"lazy\" decoding=\"async\" class=\" wp-image-17635\" src=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2021\/10\/Applicability-of-Rule-86B-300x222.jpg\" alt=\"Rule Rule-86B Applicability\" width=\"800\" height=\"592\" srcset=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2021\/10\/Applicability-of-Rule-86B-300x222.jpg 300w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2021\/10\/Applicability-of-Rule-86B.jpg 600w\" sizes=\"(max-width: 800px) 100vw, 800px\" \/><\/p>\n<ul>\n<li>In the case of a non-existent supplier, the input tax credit is blocked. Surprisingly, a provision for blocking input tax credits was included in the payment chapter. It is found in Chapter IX of the CGST regulations. It gives officers the authority to halt the <a href=\"https:\/\/carajput.com\/blog\/corporate-and-professional-updates-on-14th-august-2019\/\">input tax credit<\/a>.<\/li>\n<li>It is a severe hardship for assessees during the CVID lockout. Lot of firms are either run from home or closed. The non-existent conditions required to be updated to reflect the current circumstances. The virus could spread if the GST dept comes to visit.<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"What_must_you_know_about_Rule_86A_of_CGST_Rules\"><\/span><span style=\"color: #000080;\"><strong>What must you know about Rule 86A of CGST Rules?<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>Input tax credit blocking via Rule 86A of the CGST Rules is valid up to 1 Year from the date of such blocking. However, notice or any proceedings can be initiated against the assessee in the meantime.<\/li>\n<li>If a notice is issued, the Input tax credit earlier blocked must be unblocked as a legal action will take over the issue. But, if notice was not issued during that 1 year, the Input tax credit must be unconditionally unblocked.<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"When_will_the_GST_blocking_of_Input_Tax_Credits_cease\"><\/span><span style=\"color: #000080;\"><strong>When will the GST blocking of Input Tax Credits cease?<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>Blocking of Input Tax credit under GST cease restriction will cease only after the expiry of 1 year from the date of introduction of such restrictions under the GST Rule.<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"Ripe_for_Constitutional_Challenge-_Rule_86A_of_the_CGST_Rules\"><\/span><span style=\"color: #000080;\"><strong>Ripe for Constitutional Challenge- Rule 86A of the CGST Rules<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>According to a review of rule 86A of the CGST Rules subject to a bona fide assessee to undue hardship by freezing their electronic credit ledger, where Input Tax Credit was legitimately claimed, due to the default of their supplier,<\/li>\n<li>Furthermore, section 16 does not specify a procedure to be followed in such circumstances of credit denial. Given the fundamental constitutional issues outlined above,<\/li>\n<li>There are sufficient reasons for a jurisdictional high court to examine an order was issued under Rule 86A of the CGST Rules.<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"Tell_me_what_happened\"><\/span><span style=\"color: #000080;\"><strong>Tell me what happened<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>A CA named Mr. Madhur Agarwal from Madya Pradesh, filed an Right to Information Act, 2005 application under RTI seeking details of Input tax credit blocked under Rule 86A of Central Goods and Services Tax (CGST)\u00a0Rules 2017<\/li>\n<li>The first query was on the state-wise break-up &amp; the 2<sup>nd<\/sup> query was on the total Input tax credit blocked under the Central Goods and Services Tax (CGST)\u00a0Rules, 2017 Rule 86A as of 31st July 2021.<\/li>\n<li>These were responded to as below:\n<ul>\n<li>UP recorded the highest value of Input tax credit blocked at INR 5,82,000\/- Cr.<\/li>\n<li>Delhi\u00a0had highest No of taxpayers with Input tax credit blocked under Rule 86A &#8211; a total of 13,539 taxpayers.<\/li>\n<\/ul>\n<\/li>\n<li>Input tax credit blocked for all the Indian states cumulatively came up to INR 6,14,000\/- Cr.<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"When_the_this_backtrack_on_Input_tax_credit_blocked_under_Rule_86A_happened\"><\/span><span style=\"color: #000080;\"><strong>When the this backtrack on Input tax credit blocked under Rule 86A happened <\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>These figures, especially the INR 6,14,000\/- crore were refuted, and it was told that the figure included Input tax credit blocked due to errors in data entries by taxpayers.<\/li>\n<li>It was said that \u200b\u200bthe actual Input tax credit blocked was in fact INR 14,000 crore for 66,000 assessees. Seems the RTI reply overstated Input tax credit blocked by INR 6,00,000\/- crores.<\/li>\n<\/ul>\n<h2><span class=\"ez-toc-section\" id=\"BOMBAY_HIGH_COURT_%E2%80%93_Rulings_on_Rule_86A\"><\/span><span style=\"color: #ff0000;\"><em>BOMBAY HIGH COURT &#8211; Rulings on <\/em><strong><em>Rule 86A<\/em><\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-31019\" src=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2021\/10\/86B.jpeg\" alt=\"86B\" width=\"800\" height=\"1063\" srcset=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2021\/10\/86B.jpeg 800w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2021\/10\/86B-226x300.jpeg 226w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2021\/10\/86B-771x1024.jpeg 771w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2021\/10\/86B-768x1020.jpeg 768w\" sizes=\"(max-width: 800px) 100vw, 800px\" \/><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Blocking_of_Electronic_Credit_Ledger_under_GST_%E2%80%93_Judgement_on_Rule_86A\"><\/span><span style=\"color: #000080;\"><strong><em>Blocking of Electronic Credit Ledger under GST &#8211; Judgement on Rule 86A<\/em><\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><em>In the matter of ADVENT INDIA PE ADVISORS PRIVATE LIMITED Vs THE UNION OF INDIA AND ORS (WP)<\/em><\/p>\n<ul>\n<li><em>Throughout this case, the GST Officer unblocked the electronic\u00a0credit ledger regardless of the fact that it had been blocked for one year since the petitioner had not presented a reconciliation statement between GSTR-2A and the ITC claimed.<\/em><\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"Electronic_credit_ledger_was_ordered_to_be_unblocked_by_the_BOMBAY_HIGH_COURT_on_the_reasons_listed_below\"><\/span><span style=\"color: #ff9900;\"><em>Electronic credit ledger was ordered to be unblocked by the BOMBAY HIGH COURT on the reasons listed below: <\/em><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li><em>Strangely, the instructions do not refer to rule 86A(3). Respondent number 2 appears to be unaware of such a provision. The petitioner is entitled to assert that ITC should have been unblocked promptly after one year of the restriction being imposed, depending on the statutory mandate in Rule 86A(3).<\/em><\/li>\n<li><em>If the respondents were of the conclusion that petitioner was not cooperating with the department, they should have taken legal action against it.<\/em><\/li>\n<li><em>But, claiming that a response is pending and that the restriction has not been lifted as a consequence is clearly illegal.<\/em><\/li>\n<\/ul>\n<p>Popular Articles :<\/p>\n<p><strong><span style=\"font-size: 12.0pt; font-family: 'Bookman Old Style','serif'; color: #000066;\"><a href=\"https:\/\/carajput.com\/blog\/all-about-gst-tds\/\"><span style=\"color: #000066;\">Key takeaways about TDS under GST<\/span><\/a><\/span><\/strong><\/p>\n<p><strong><span style=\"font-family: 'Bookman Old Style','serif'; color: #000066;\"><a href=\"https:\/\/carajput.com\/publications\/guidance-and-understanding-tds-on-gst.pdf\"><span style=\"color: #000066;\">Complete Guidance on TDS applicable on Goods and Services<\/span><\/a><\/span><span style=\"font-family: 'Bookman Old Style','serif'; color: #000066;\"><a href=\"https:\/\/carajput.com\/publications\/guidance-and-understanding-tds-on-gst.pdf\" data-cke-saved-href=\"https:\/\/carajput.com\/publications\/guidance-and-understanding-tds-on-gst.pdf\"><span style=\"font-family: 'Bookman Old Style','serif'; color: #000066; text-decoration: none; text-underline: none;\">\u00a0Tax\u00a0<\/span><\/a><\/span><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>About the New Rule 86A of the CGST Rules Rule 86A of the CGST Rules was introduced to block fraudulently availed Input tax credit. As per this Rule, any officer authorised or a commissioner by himself can block the Input tax credit available in the electronic credit ledger of the taxpayer if they has \u2018reasons &hellip;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[172],"tags":[10025],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts\/17632"}],"collection":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/comments?post=17632"}],"version-history":[{"count":5,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts\/17632\/revisions"}],"predecessor-version":[{"id":31020,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts\/17632\/revisions\/31020"}],"wp:attachment":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/media?parent=17632"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/categories?post=17632"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/tags?post=17632"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}