RCM PAYABLE ON RENT
This query is : Resolved
16 February 2025
DEAR SIR,
MY CLIENT PAYING GST ON RENT, HIS ITC CREDIT BALANCE IS EXCESS THAN TAX LIABLITY, IF GST PAID ON RENT BY RCM HOW TO CLAIM ITC ON RENT. OR THE GST PAID ON RENT RECORDED IN RCM STATEMENT/RCM LIABILITY. TWO MONTHS HAVE PAID RCM THROUGH CASH. THE TAX SHOWING IN RCM LIABILITY LEDGER.
PLEASE CLARIFY ME
REGARDS
MY CLIENT PAYING GST ON RENT, HIS ITC CREDIT BALANCE IS EXCESS THAN TAX LIABLITY, IF GST PAID ON RENT BY RCM HOW TO CLAIM ITC ON RENT. OR THE GST PAID ON RENT RECORDED IN RCM STATEMENT/RCM LIABILITY. TWO MONTHS HAVE PAID RCM THROUGH CASH. THE TAX SHOWING IN RCM LIABILITY LEDGER.
PLEASE CLARIFY ME
REGARDS
12 August 2025
RCM on Rent:
If GST on rent is payable under the Reverse Charge Mechanism (RCM), your client (the recipient of service) is liable to pay the GST directly to the government.
Payment and Recording:
When your client pays GST on rent under RCM, the payment is recorded as RCM liability in the books and also in the GST portal under the RCM ledger.
Claiming ITC:
The GST paid under RCM is eligible for claiming Input Tax Credit (ITC), provided all other conditions for ITC are met (like the rent is for business use, proper invoice received, etc.).
The ITC can be claimed in the same month or subsequent months when filing GSTR-3B under the RCM section.
Excess ITC:
If your client’s total ITC (including on RCM payments) exceeds their GST liability for that month, the excess ITC will be carried forward in the Electronic Credit Ledger (ECL) and can be used in future periods.
Practical Steps:
Ensure the rent invoice is received from the landlord (service provider).
Report the RCM liability and ITC claim properly in GSTR-3B (under the respective RCM section).
Pay the RCM tax on time via cash ledger if ITC is not available or less.
Claim the same GST paid as ITC in GSTR-3B.
If your client has paid RCM through cash for two months and GST is showing in the RCM liability ledger, they should be able to claim the corresponding ITC in GSTR-3B of the respective month.
If GST on rent is payable under the Reverse Charge Mechanism (RCM), your client (the recipient of service) is liable to pay the GST directly to the government.
Payment and Recording:
When your client pays GST on rent under RCM, the payment is recorded as RCM liability in the books and also in the GST portal under the RCM ledger.
Claiming ITC:
The GST paid under RCM is eligible for claiming Input Tax Credit (ITC), provided all other conditions for ITC are met (like the rent is for business use, proper invoice received, etc.).
The ITC can be claimed in the same month or subsequent months when filing GSTR-3B under the RCM section.
Excess ITC:
If your client’s total ITC (including on RCM payments) exceeds their GST liability for that month, the excess ITC will be carried forward in the Electronic Credit Ledger (ECL) and can be used in future periods.
Practical Steps:
Ensure the rent invoice is received from the landlord (service provider).
Report the RCM liability and ITC claim properly in GSTR-3B (under the respective RCM section).
Pay the RCM tax on time via cash ledger if ITC is not available or less.
Claim the same GST paid as ITC in GSTR-3B.
If your client has paid RCM through cash for two months and GST is showing in the RCM liability ledger, they should be able to claim the corresponding ITC in GSTR-3B of the respective month.
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