Reverse charge mechanism

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karthikeya mukund (Querist)
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17 November 2013 In partial RCM the due dates of payment varies for service provider and service receiver,service receiver paid his portion of tax in time where as service provider doesn't.my doubt is can service receiver take the total credit as and when he pays his portion of tax? Resolve it ASAP.

Thanks& Regards.

CA Kintal Shah

CA Kintal Shah (Expert)
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18 November 2013 in my view we need to follow POT Rules.

If payment is due within the limit mentioned in POTR, you are liable to pay.

Service receiver needs to take care of his portion of liability. if service provider is not paying tax on time then, he(service provider) will be penalised by department.

Service receiver can very well take the credit even before making payment as now we have shifted from payment basis to accrual/due basis. (need to reverse if not paid actually for 6months)

Suresh Ramaswamy

Suresh Ramaswamy (Expert)
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19 November 2013 The view given by the CA Kintal Shah is absolutely clear. If you have a proper tax invoice from the service provider and remit your portion of RCM, you can claim full CENVAT credit, your share on the basis of GAR-7 challan and the service providers share on the basis of the tax invoice.

I advise all my clients, especially the smaller corporates and non corporates to avail of CENVAT input credit only on payment basis. Bigger corporates have a policy of payment of bills and if the period of credit is less than 6 months then the Input may be claimed on accural basis.

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