Full eligible credit & there is no accumulation of credit
This query is : Resolved
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
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
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.
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.
20 August 2025
But sir, as per supreme court verdict, presently we are not paying RCM on ocean freight ( CIF ).
Any problem?
Any problem?
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