RCM on rent for Restaurant

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This query is : Resolved

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A restaurant owner operating under the 5% GST scheme without claiming Input Tax Credit (ITC) is asking about paying GST on rent under the Reverse Charge Mechanism (RCM). They want to know if they can then claim this RCM GST as ITC, even though they can't claim ITC on other supplies, and how to report it in their GSTR-3B. The advice given is that even under the regular scheme, ITC on rent cannot be claimed if the 5% concessional GST rate was chosen, as this rate prohibits ITC availment.

Gopalakrishnan. S

Gopalakrishnan. S (Querist)

19 September 2022 Sir,

One of my friend is running a Restaurant. He has opted for 5% GST without availing ITC.
Now, if he pays GST on rent under RCM clause, can he avail the same as ITC, though he
is ineligible to avail the ITC on other supplies. Further, is it correct to enter the Rent amount
along with GST in Table 3.1 (d) in GSTR 3B return.

Kindly advice.

Deepa B

Deepa B (Expert)

20 September 2022 Though the liability is discharged under RCM for rent, same cannot be availed as ITC. Because composition dealers are completely barred from claiming any input tax credit. As rightly pointed out by you, reporting of same in GSTR-3B would be done in Table 3.1(d)

Gopalakrishnan. S

Gopalakrishnan. S (Querist)

20 September 2022 Thanks Mam. Actually, we are under Regular scheme only. Not Composition dealer. Still, should we forego the ITC on RCM - Rent ?

Deepa B

Deepa B (Expert)

22 September 2022 Yes. Still you are not allowed to claim ITC on rent as 5% concessional rate of GST comes with the condition of non-availment of ITC.

Gopalakrishnan. S

Gopalakrishnan. S (Querist)

22 September 2022 Ok Mam. Thanks a lot.

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