Credit Note received on RCM invoices
This query is : Resolved
14 August 2024
Dear Expert,
01.The GST Registered person has received from the service provider ,for which he has paid the GST under RCM.
02.Later on, he has received the credit note for that RCM amount, which was paid by the registered person.
03.Now how the GST components on the credit note for RCM, shall be processed under GST return?
01.The GST Registered person has received from the service provider ,for which he has paid the GST under RCM.
02.Later on, he has received the credit note for that RCM amount, which was paid by the registered person.
03.Now how the GST components on the credit note for RCM, shall be processed under GST return?
12 August 2025
Scenario Recap:
You (recipient) paid GST under RCM on an invoice.
Now, the service provider has issued a credit note reducing the invoice value.
You want to know how to adjust the GST paid under RCM in your GST returns.
How to process Credit Note for RCM in GST Returns:
1. Adjusting the RCM tax liability:
When you receive a credit note, it means the taxable value has decreased, so the GST paid under RCM should also be reduced accordingly.
You should adjust your RCM tax liability in the return for the period in which you receive the credit note.
2. In GSTR-3B:
Reduce the RCM tax paid in the relevant tax heads (CGST, SGST, IGST) in the month of credit note receipt.
For example, if initially you reported Rs. 10,000 as RCM tax on the original invoice, and credit note reduces it by Rs. 2,000, then in the current return:
Report Rs. 8,000 as RCM tax liability.
3. In GSTR-2B / GSTR-2A / GSTR-9:
The credit note issued by supplier should reflect in GSTR-2A/2B, and you should claim input tax credit (ITC) adjustment accordingly.
Make sure the supplier reports the credit note in their GSTR-1.
4. Input Tax Credit (ITC) adjustment:
Since you paid GST under RCM, you would have claimed ITC for that amount.
Upon receiving a credit note, you should reduce ITC claimed proportionately in the month of credit note receipt.
You (recipient) paid GST under RCM on an invoice.
Now, the service provider has issued a credit note reducing the invoice value.
You want to know how to adjust the GST paid under RCM in your GST returns.
How to process Credit Note for RCM in GST Returns:
1. Adjusting the RCM tax liability:
When you receive a credit note, it means the taxable value has decreased, so the GST paid under RCM should also be reduced accordingly.
You should adjust your RCM tax liability in the return for the period in which you receive the credit note.
2. In GSTR-3B:
Reduce the RCM tax paid in the relevant tax heads (CGST, SGST, IGST) in the month of credit note receipt.
For example, if initially you reported Rs. 10,000 as RCM tax on the original invoice, and credit note reduces it by Rs. 2,000, then in the current return:
Report Rs. 8,000 as RCM tax liability.
3. In GSTR-2B / GSTR-2A / GSTR-9:
The credit note issued by supplier should reflect in GSTR-2A/2B, and you should claim input tax credit (ITC) adjustment accordingly.
Make sure the supplier reports the credit note in their GSTR-1.
4. Input Tax Credit (ITC) adjustment:
Since you paid GST under RCM, you would have claimed ITC for that amount.
Upon receiving a credit note, you should reduce ITC claimed proportionately in the month of credit note receipt.
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