Ad-Free CAclubindia and Daily Updates on your mobile. Subscribe Now!

Itc under rcm

Shivani (Learner) (1881 Points)

19 June 2018

Dear Friends

We know that under RCM, the recipient has to pay tax.

We also know that he first needs to pay RCM tax before claiming its Credit.

But i want to know which section or rule says this that RCM tax first needs to be paid before claiming its credit.

please guide.

Shivani

Reply
Follow
Share

9 Replies

Ravi SADhiyan (Practice) (4510 Points)
Replied 19 June 2018

Without Payment of RCM in Cash

You Can't be filled GSTR-3B

So Its required to pay RCM Tax Liability First.

Upgrade to CAclubindia Pro. Subscribe Now!

Vinod Babu (24191 Points)
Replied 19 June 2018

Reverse charge is a mechanism under which the recipient of the goods or services is liable to pay the tax instead of the provider of the goods and services. Under the normal taxation regime, supplier collects the tax from the buyer and deposits the same after adjusting the output tax liability with the input tax credit available. But under reverse charge mechanism (RCM), liability to pay tax shifts from supplier to recipient.

22nd GST council meeting in its press notification mentioned that the reverse charge mechanism (RCM) under sub-section (4) of section 9 of the CGST Act, 2017 and under sub-section (4) of section 5 of the IGST Act, 2017 is set to be suspended till 31.03.2018 which was later extended till 30th June 2018 in the subsequent 26th GST council meeting is still to be reviewed by the expert committee. All in one, it will reduce the compliance cost and benefit the small businesses.

As per section 2(98) of CGST Act’ 2017, “reverse charge” means the liability to pay tax by the recipient of the supply of goods or services or both instead of the supplier of such goods or services or both

under sub-section (3) or sub-section (4) of section 9, or

under sub-section (3) or subsection (4) of section 5 of the Integrated Goods and Services Tax Act

Vaidyanath Easwaran (..) (24 Points)
Replied 19 June 2018

for claiming ITC there is condition that Tax should be actually paid

Pankaj Rawat (GST Practitioner) (55047 Points)
Replied 19 June 2018

As per section 2(98) CGST Act
Liability to pay Tax by recipient

Rule 36 of CGST Rules Perscribes Documentary requirements & conditions for claiming Input tax credit. Rule 36(1) Perscribes the documents which shall form the basis for claiming input tax credit.As per section 31(3)(f),the registered recipient paying tax under RCM ,has to issue Invoice in respect of goods/services received by him from an unregistered Supplier According to sub clause(b) to rule 36(1) Invoice issued in accordance with provisions of Section 31(3)(f) of the CGST Act, subject to payment of Tax is eligible document for Claiming credit of input tax.

It is clear that by virtue of Rule 36(1) Invoice raised by the recipient is the eligible document for claiming credit of tax paid under RCM But rule also imposes condition for payment of tax.

1 Like