Full eligible credit & there is no accumulation of credit

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This discussion clarifies the meaning of 'full eligible credit' and 'no accumulation of credit' concerning GST on imported ocean freight. It explains that importers can claim the full Input Tax Credit (ITC) for GST paid under Reverse Charge Mechanism (RCM) on ocean freight, and this credit should be fully utilised against output tax liabilities to prevent it from accumulating. The advice suggests paying GST under RCM for ocean freight, even with a Supreme Court ruling suggesting otherwise, as a safer approach to avoid future litigation.

Rajkumar Gutti

Rajkumar Gutti (Querist)
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20 May 2025 One article, I read recently on tax guru.
Summary / essence is below
Goods received by Indian Importer under CIF basis even though supreme court held that RCM is not applicable in import ocean freight,, but entry in the RCM notification, still present & not removed by the Govt.. If full credit is eligible & there is no accumulation of the credit. Then in the such case suggested to discharge under RCM to avoid future litigation.

In above summary " full eligible credit & no accumulation of credit " = This meaning I am not understand.
You are requested please explain exact meaning

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)
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12 August 2025 Explanation of phrase:
Full eligible credit:
This means the importer can claim Input Tax Credit (ITC) in full for the GST paid (or paid under RCM) on the ocean freight service.

No accumulation of credit:
This means the ITC claimed on such ocean freight does not become “blocked” or remain unused as a balance lying in the electronic credit ledger for a long time. In other words, the credit is fully utilized against output tax liability, so it is not accumulating as a non-utilized balance.

What it implies practically:
Even though the Supreme Court said RCM is not applicable, the notification still requires GST to be paid under RCM on ocean freight.

Importers pay GST on freight under RCM (to comply with the law as per notification).

Since this GST paid is eligible for full ITC, and the importer has output GST to set-off against, the credit is fully utilized and does not accumulate unused.

This is a safer approach to avoid future litigation or demand notices, because you have discharged the GST liability properly under RCM even if Supreme Court ruling conflicts.

Summary:
Full eligible credit = You get to use 100% of the GST credit on ocean freight.

No accumulation of credit = The credit does not pile up unused; it is fully utilized to pay output GST.

Rajkumar Gutti

Rajkumar Gutti (Querist)
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20 August 2025 But sir, as per supreme court verdict, presently we are not paying RCM on ocean freight ( CIF ).
Any problem?

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