RCM of FY 2017-18

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This query is : Resolved

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This discussion addresses whether Input Tax Credit (ITC) can be claimed for Reverse Charge Mechanism (RCM) liability that arose in FY 2017-18 but was paid in FY 2020-21, with interest. While initially questioned, the consensus leans towards permissibility, citing CBIC clarifications that allow RCM payments made in a subsequent financial year to be declared and ITC claimed in that later year. This suggests that delayed RCM payments, even with interest, do not necessarily invalidate the ITC claim.

Dipjyoti Majumdar

Dipjyoti Majumdar (Querist)
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31 October 2022 Dear Forum

RCM liability arose in FY 2017-18. Self invoice generated in FY 2020-21. Interest paid for delay. RCM liability paid in FY 2020-21 and ITC claimed in same year.

Is this permissible in gst law. ?

Regards

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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31 October 2022 Not permissible..

..

Dipjyoti Majumdar

Dipjyoti Majumdar (Querist)
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01 November 2022 Sir
May I kindly ask what is the reason.
Regards

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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01 November 2022 Time limit to claim ITC over.

Dipjyoti Majumdar

Dipjyoti Majumdar (Querist)
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01 November 2022 Thanks Sir. Sorry I am continuing with the topic.

According to some school of thought, there is no time limit to raise self-invoice under section 31(3)(f) of the CGST Act.

Also your kind attention is invited to clause (g) of ‘Press Release’ from CBIC dated 3rd July 2019 relating to Clarification regarding Annual Returns and Reconciliation Statement which states :

"Reverse charge in respect of Financial Year 2017-18 paid during Financial Year 2018- 19: Many taxpayers have requested for clarification on the appropriate column or table in which tax which was to be paid on reverse charge basis for the FY 2017-18 but was paid during FY 2018-19. It may be noted that since the payment was made during FY 2018-19, the input tax credit on such payment of tax would have been availed in FY 2018-19 only. Therefore, such details will not be declared in the annual return for the FY 2017-18 and will be declared in the annual return for FY 2018-19. If there are any variations in the calculation of turnover on account of this adjustment, the same may be reported with reasons in the reconciliation statement (FORM GSTR-9C)."

It may be inferred from above that payment for RCM arising in FY 2017-18 can be made after 2017-2018, say in 2018-19, and will be entitled to ITC in FY 2018-19. It corroborates the fact that payment can be made at a later period with interest and then availment is permissible in gst law.