RCM Under GST: How To Record Entries In Tally?

RCM Under GST is a system where the tax liability shifts from the supplier to the recipient of services.

The buyer pays the GST directly to the government and can claim Input Tax Credit (ITC) if eligible.

Generally, the supplier of goods or services is liable to pay the GST. However, in some cases like imports and other notified supplies , the liability may be cast on the recipient under the reverse charge mechanism.

Process To Record RCM Under GST Entry In Tally

The steps to record RCM under GST in tally are :

• Enable GST and RCM in Tally

• Create a Supplier Ledger

• Create GST Tax Ledgers (CGST, SGST, IGST):

• Record Purchase Entries

• Create a payment entry for the RCM liability.

• Claim Input Tax Credit on RCM

For Example: Vijay pays property rent to ABC Enterprises amounting Rs 20,000. ABC Enterprises is an unregistered taxpayer and gives an invoice of rent. Now lets check how to make a entry on this.

First Entry To Be Made When An Invoice Issued

Create a ledger

Note : If the option "applicable for Reverse Charge" and "eligible for ITC" not showing then press F12 and "Yes" the option "Enable Reverse Charge" Calculation and "Eligible for Input Tax Credit".

Journal Entry

Rent Paid…......Dr 20,000
To ABC Enterprises…......Cr 20,000

Second Step Entries for Increase in Tax Liability & Input Tax Credit for RCM

Create Journal used for Increase in Tax Liability & Input Tax Credit for RCM

• Go to Journal voucher and select stat adjustment
• Type of duty / tax: GST
• Nature of adjustment: Increase in Tax Liability & Input Tax Credit.
• Additional nature of adjustment: Purchase from unregistered dealer.

Journal Entry

CGST on Input RCM…......Dr 1800
SGST on Input RCM…......Dr 1800
To CGST Liability RCM…......Cr 1800
To SGST Liability RCM…......Cr 1800

How to Record this Ledger Entries

CGST on Input RCM
Under - Duties & Taxes (Current Liabilities)
Type of Duty / Tax - GST
Tax Type - CGST
Percentage of calculation - 9% (By entering Alt+A)

SGST on Input RCM
Under - Duties & Taxes (Current Liabilities)
Type of Duty / Tax - GST
Tax Type - SGST
Percentage of calculation - 9% (by entering Alt+A)

CGST liability RCM
Under - Duties & Taxes (Current Liabilities)
Type of Duty / Tax - Others

SGST liability RCM
Under - Duties & Taxes (Current Liabilities)
Type of Duty / Tax - Others

Third Step To Make Payment

• Go to Payment Voucher.

• Click on Stat Adjustment for GST and TDS.

• Select payment under Reverse Charge in GST Nature of Payment.

Then make the entry -

CGST Liability RCM…......Dr 1800
SGST Liability RCM…......Dr 1800
To Bank Account…......Cr 3600

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