RCM Availment

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sankar ponnan (Querist)
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08 April 2021 Sir / Mam-
I am a steel trader. Manufacturer charges the freight also in his invoice and collects gst @ 18% on freight. But, He pays the freight to GTA (GST Exempted) and he pays gst @ 5% under RCM on freight paid and availed that inputs also.

Here, He saves GST @ 13% on freight and @5 % on RCM credit and utilizes towards his sales.
So, He enjoys the entire GST @18 % on freight collected from me While I suffer the gst.

Why this deviation and why the act safe the manufacturer?

To avoid this GST loss, It is better that I pay inward freight and GST @ 5% on RCM then avail the credit.

Is it correct sir ?
Plz convey your opinion
thanks in adv

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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08 April 2021 Yes, to avoid this GST loss, It is better that you pay inward freight and GST @ 5% on RCM then avail the credit.

It's correct.

CMA Poornima Madhava

CMA Poornima Madhava (Expert)
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09 April 2021 Am a bit confused here. Being a trader, will you not be able to avail entire GST @18% as ITC. How will this be a loss to you? Moreover, if you pay GST @5% on RCM, your ITC will also be limited to 5%. Am I missing anything here?

sankar ponnan

sankar ponnan (Querist)
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09 April 2021 Yes .. Yes...U are right Mam. I missed that point -ITC. Sorry I placed this question with wrong concept. thanks for guidance plz.
But, I think , Paying 5% on fright under RCM is best in cost wise than paying 18%.

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