Declaration of tax paid on rcm

Based on the current GST guidelines, here is how you should handle Reverse Charge Mechanism (RCM) payments made after the end of the financial year:

1. Timing of Reporting

You must report the RCM tax and the associated Input Tax Credit (ITC) in the GSTR-9 of the financial year in which the tax was actually paid, not the year in which the transaction originally occurred. This is a standard practice clarified by the GSTN (supported by a CBIC press release).

2. How to Report in GSTR-9

• Do not report in the previous year's GSTR-9: If you paid the RCM for a previous year in the current financial year, it should not appear in the annual return of the previous year.

• Report in the year of payment: Include the RCM liability and the corresponding ITC in the GSTR-9 of the financial year during which the payment was made.

• Table 9: This table captures the tax payable and paid as per your returns (GSTR-3B) for the current financial year. Since the RCM payment was made via a GSTR-3B filed in the current year, it will naturally be reflected here.

3. Key Considerations

• Payment Method: Remember that RCM liabilities must be paid in cash through the Electronic Cash Ledger. You cannot use ITC to discharge RCM liabilities.

• Interest: If the RCM payment was delayed, ensure that the applicable interest is also paid and accounted for in your records.

• GSTR-9C Reconciliation: If there is a mismatch between your books of accounts and the GST returns due to the timing of these payments, you can provide an explanation in Table 13 of GSTR-9C (if applicable). This ensures transparency and helps justify the differences to tax authorities during audits.

Summary:

For RCM tax paid after the close of a financial year, do not report it in the GSTR-9 of the previous year. Instead, report the tax payment and the related ITC in the GSTR-9 of the financial year in which the payment was actually made in your GSTR-3B. Any resulting reconciliation differences can be explained in Table 13 of GSTR-9C.