Why is RCM treated as Current Assets in the books instead of Booking it as expense or showing it as liability?
RCM is not an expense but liability which is to be paid by us.
What is the rationale for the same?
5 Replies
Shweta Gupta
(Assistant Manager)
(224 Points)
Replied 30 July 2019
tax payable under RCM is your current liabilities and. if you can avail ITC after payment under RCM then same amount will be go to your ITC leadger which is generally under current assets
Udit Desai
(6 Points)
Replied 30 July 2019
Agreed. I wasn't clear in my question. Why do we pass entry for RCM as
Tax on RCM (Current Asset) Dr
To CGST payable
To SGST Payable
Tax on RCM (Current Asset) Dr
To CGST payable
To SGST Payable
Ravi SADhiyan
(Practice)
(4510 Points)
Replied 30 July 2019
Because RCM liability First Required to Pay in Cash
Then Avail credit
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