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input on reverse charge

dheeraj Singh negi (excutive) (57 Points)

20 August 2017

if we had paid reverse charge of July month in August, can we claim input of reverse charge in July month..it's urgent....

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RAJA P M ("Do the Right Thing...!!!") (127074 Points)
Replied 20 August 2017

If you paid with interest then you can claim....

dheeraj Singh negi (excutive) (57 Points)
Replied 20 August 2017

sir we can pay liability of July month up to 20th of next month without any interest

RAJA P M ("Do the Right Thing...!!!") (127074 Points)
Replied 20 August 2017

Originally posted by : dheeraj Singh negi
	sir we can pay liability of July month up to 20th of next month without any interest

Liability is Ok.

But, RCM basis tax amount ll be pay on the transaction date. Then only you ll be take ITC on return...

Madhukar N Hiregange (Chartered Accountant) (38934 Points)
Replied 20 August 2017

RCM accounted in a particular month would be eligible as credit in that month itself.

Sanjeev Arora (Prop.) (68 Points)
Replied 20 August 2017

फ़िलहाल Monthly bill RCM allowed

Sivaraman A R (.) (1038 Points)
Replied 20 August 2017

GST twitter handle is not sticking into one answer. They are giving different answers for the same question pertaining to this RCM on purchases from URD dealers (unregistered dealers).

On seeing the word "payable" in the definition of Input tax u/s 2(62) and the word "such other tax paying documents" in section 16(2)(a) relating to eligibility to take ITC, I feel what the twitter handle says about eligibility to take credit in the same month is correct. But when I look into the intention of RCM, it feel the twitter handle is wrong.

I think we should not go straight by grammatical sense for the word "payable" in section 2(62). Also what is the tax paying document as mentioned in section 16(2)(a), whether it is challan or payment voucher, is also not clear.

And 2nd proviso to section 16, which says about reversal of ITC if bill is not paid within 180 days to vendor, carves out an exception to "supplies on which tax is payable on RCM". This 2nd proviso carves out exemption under the implication that RCM credit can be taken only on payment basis and not on payable basis. If RCM credit is available on payment basis, there is no question of reversal - which is clear in second proviso. So I think we should go by the intention of law by combined reading of section 2(62), 16(2)(a) and 2nd proviso to 16, and not by mere grammatical sense.

If one can show the RCM payable in the Output tax column and show the same as ITC credit in the same month, what is the need for RCM Tax. Govt should have simply told to show the amount of URD purchase value, and tell the purchasers to pay RCM only for those purchases which are not eligible for credit.

If RCM is eligible for credit in the same month, then there is no working capital problem, there is no risk of identifying rates for purchasers on those URD purchases. Only problem they have to face is accounting. Accounting problem can be solved if govt says - purchasers to pay RCM in cash only for those purchases which are not eligible for taking credit.

This will enable big companies *not* to force small business people to take GST registration as a requirement to register them as their vendors.

There is full confusion in this RCM. I feel RCM is a section which forces small companies to take GST registration even though there are not liable to take registration. Big companies don’t engage with small vendors not having GST registration because of 3 main reasons

Risk of identifying the classification of URD purchase and rates falls on purchasers. If rate goes wrong, govt will catch the purchasers.
Working capital problem (if RCM credit available on payment basis)
Accounting problem. – There is no GST in the bills. Purchaser has to add one debit and credit for GST on RCM purchase. One (Credit side) to pay RCM and another one (debit side) to take ITC.

I feel government should come out with a clarification.

Correct me if I am wrong.