TAX on RCM

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This discussion clarifies the accounting treatment of tax paid under the Reverse Charge Mechanism (RCM). It's neither a direct expense nor a fixed asset. If the Input Tax Credit (ITC) for RCM paid is claimable, it should be recorded as a current asset. The entry ultimately balances out when the RCM liability and ITC are accounted for.

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(Querist)
16 March 2024 Please let me know whether TAX on RCM paid is expense or Asset. Please me know how to pass the entry in books of account.

Prakash Menon
Accountant
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RAJA P M

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RAJA P M (Expert)
16 March 2024 It's not on expenses nor Asset...
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CA R SEETHARAMAN

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CA R SEETHARAMAN (Expert)
17 March 2024 In case ITC claimable on RCM paid keep it under current assets.
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RAJA P M

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RAJA P M (Expert)
17 March 2024 Yes, it's no effect. Bcoz, It's tallied after book under RCM of Liability and ITC.
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