RCM PAID ON RENT IN RESTAURANT BUSINESS @ GST RATE 5%

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This query is : Resolved

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This discussion clarifies the complexities of paying Reverse Charge Mechanism (RCM) on restaurant rent at 18% while charging 5% GST on customer bills. It explains that RCM must be paid via the cash ledger, and since restaurants operating under the 5% scheme cannot claim Input Tax Credit (ITC), any RCM paid will appear in the ITC ledger and needs to be reversed to reflect its correct treatment.

Sunil Yadav

Sunil Yadav (Querist)
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15 January 2025 I HAVE PAID RCM ON RENT AT 18% AND GST CHARGE ON RESTAURANT BILL AT 5%.

I HAVE NOT TAKEN CREDIT BUT RCM PAID AMOUNT SHOWN IN ITC CREDIT LEDGER HOW I CAN GET EFFECT FOR THE SAME TO NILL THE CREDIT

CA. Bhavik P. Chudasama

CA. Bhavik P. Chudasama (Expert)
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15 January 2025 RCM is to be paid via Cash Ledger and as in Restaurant Business you can collect 5% GST but cannot claim ITC, RCM Credits needs to be reversed as you cannot claim ITC as GST Law for restaurant business

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Sunil Yadav

Sunil Yadav (Querist)
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18 January 2025 as per 55 GST MEETING - Composite Dealer exclude from RCM and we also charge rate concessional it can be expecting the same also be exclude restaurant business in future

Sunil Yadav

Sunil Yadav (Querist)
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18 January 2025 as per 55 GST MEETING - Composite Dealer exclude from RCM and we also charge rate concessional it can be expecting the same also be exclude restaurant business in future

CA. Bhavik P. Chudasama

CA. Bhavik P. Chudasama (Expert)
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18 January 2025 Restaurant business have 2 options

1. Charge 5% under Normal Scheme with No ITC
2. Pay 5% under Composition with No ITC

GST Council have given reflief to Composition Dealers, but generally from experience majorly restaurant opt for 1st option as you can collect and pay to the GST Dept .

My reply was based on Restaurant Business under Normal Scheme. rest if your views are based on future outcome then its your call to wait

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