Buyer issues RCM invoice for Professional services (Software)

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Kumar S

COnsultant

31 Points Posted on 01 January 2024

Hi Experts,

Last year I worked for a IT consultancy, they mentioned that RCM will be paid by them in PO terms, it seems IT Services are not covered under RCM.

I crossed thresold limit of 20L alreay in last year, please advise on next steps.

Thanks in advance..!

Replies (11)

Quick Summary

A user provided IT consultancy services and was informed by their buyer that GST would be paid under Reverse Charge Mechanism (RCM). However, they later discovered that IT services are not covered under RCM and they had already crossed the GST threshold limit. The user is seeking advice on how to proceed, including whether they can still collect GST from the buyer based on the incorrect Purchase Order and how to avoid penalties.

jacinthamary

accountant

542 Points Posted on 01 January 2024

Yes IT consultancy is not eligible for RCM. Register for GST and file GST return from the month when you crossed the threshold limit.

Kumar S

COnsultant

31 Points Posted on 01 January 2024

If I register now and pay GST, will there be any interest or penalty?

Buyer mentioned RCM in purchase order, is there any legal way to collect GST from buyer, as they specifically mentioned RCM is applicable on this.

RAJA P M

"Do the Right Thing...!!!"

77833 Points Posted on 01 January 2024

@ Kumar S,

What is Your actual service...??!

Kumar S

COnsultant

31 Points Posted on 01 January 2024

@ RAJA

It is IT consulting services, I came to know that RCM is not applicable for this, but buyer specifically mentioned that GST is liable to RCM, so I didn't get GST registration.

PO is a legal document, is there any way I can still collect GST from buyer based in incorrect PO.

CA Raj Doshi

Practising CA

5649 Points Posted on 01 January 2024

Whats done is done. The financial year is over and all filings are done. No buyer will entertain such gst collection requests more so when they are not going to get credit it for either.

So this is an open issue for you frankly.

Start complying from the upcoming financial year or immediately.

Rgds
CA. Raj Doshi
R C D & Co.
Chartered Accountants
Kandivali West,Mumbai

Rgds
CA. Raj Doshi
R C D & Co.
Chartered Accountants
Kandivali West,Mumbai

Amit Kumar

Tax Professional

67 Points Posted on 02 January 2024

You should get yourself registered and pay GST since you crossed the threshold limit to avoid the burden of interest and penalty.

Suresh Kumar

Account

298 Points Posted on 02 January 2024

My advise:- forgot about pasting things....

Now, take GST Registration and start to collect GST from your client on FCM basis & pay to govt.

RAJA P M

"Do the Right Thing...!!!"

77833 Points Posted on 02 January 2024

@ Kumar S,

- Discuss the details with Your client and ask po without notifying the RCM.

- Take GST registration and continue the service as FCM mode.

Kumar S

COnsultant

31 Points Posted on 02 January 2024

Thank you all for your advises, I am worried about receiving GST notice that to in coming years, which will be with interest and penality. After all, this happened with my limited GST knowledge and incorrect PO by buyer which says RCM.

Planning to stop my consulting services and to find some job with fixed pay.

RAJA P M

"Do the Right Thing...!!!"

77833 Points Posted on 02 January 2024

Originally posted by : Kumar S
	Thank you all for your advises, I am worried about receiving GST notice that to in coming years, which will be with interest and penality. After all, this happened with my limited GST knowledge and incorrect PO by buyer which says RCM. Planning to stop my consulting services and to find some job with fixed pay.

This is not a good decision...

RAJA P M

"Do the Right Thing...!!!"

77833 Points Posted on 02 January 2024

Originally posted by : Kumar S
	Thank you all for your advises, I am worried about receiving GST notice that to in coming years, which will be with interest and penality. After all, this happened with my limited GST knowledge and incorrect PO by buyer which says RCM. Planning to stop my consulting services and to find some job with fixed pay.

This is not a good decision...