Input tax credit of Central Railway

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This query is : Resolved

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A client in the transportation business, operating under RCM, receives payment from Central Railway after a 5% GST deduction. The query is whether the client can claim ITC on this deducted GST against their GST liability on rent income. The consensus is that ITC cannot be claimed on GST deducted by the recipient (Central Railway) in this scenario. The discussion clarifies that under RCM, the recipient pays GST, not the supplier, and the supplier bills the full amount without charging GST.

DIVYESH JAIN

DIVYESH JAIN (Querist)

11 January 2020 My client is into transportation business under rcm. But he pays gst on rent income earned. The goods are transported to Central Railway and they pay him back the amount after deducting gst @ 5%

I want to know whether he can claim Input tax credit of Central Railway while paying gst of rent income earned.

Thanks

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

11 January 2020 No ITC can be claimed on such GST deducted.

DIVYESH JAIN

DIVYESH JAIN (Querist)

11 January 2020 Ok, Thank you sir for your reply

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

11 January 2020 Welcome................

Gokul Sharma

Gokul Sharma (Expert)

11 January 2020 SIR THEN HE SHOULD BILLED TO GOVT BILL + 5 % VALUE
BECAUSE 5% DEDUCTED BY GOVT
IN OUTSIDER WE CHARGE 100 RS + 5 RS TAX AND 5 RS PAY TO GOVT
SO MY INCOME IS RS 100 BECAUSE WE PAY THE COLLECTED AMOUNT.

BUT IN GOVT ENTRY OUR INCOME IS 95 (100-5)

CA Anita Bhadra

CA Anita Bhadra (Expert)

11 January 2020 In case of RCM , Recipient will not deduct GST . He will pay out of his pocket & claim ITC .
You ( supplier) will not charge GST .
You will bill to Govt 100 and they will pay it to u ( They will deduct TDS @ 2% of GST , which you can claim)

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