Discharge the liability of RCM reg.

Reporting and discharging old Reverse Charge Mechanism (RCM) liabilities in a subsequent GSTR-3B return is a standard practice when the liability was previously omitted or missed.

Key Points for Compliance:

• Payment Requirement: Under the GST law, RCM liability must be discharged exclusively in cash by debiting the Electronic Cash Ledger. You cannot use Input Tax Credit (ITC) to pay RCM liabilities.

• Reporting: You report the RCM liability in Table 3.1(d) of the GSTR-3B for the month in which you are discharging the payment.

• ITC Eligibility: Once you have paid the RCM liability in cash, you are eligible to claim the corresponding Input Tax Credit (ITC). This is reported in Table 4(A)(3) of the GSTR-3B in the same return period.

• Interest: Since the liability pertains to the 2017-18 period and was paid in 2021, please note that interest is applicable for the delayed payment. The tax should be paid along with the interest calculated from the original due date until the actual date of payment.

Why this approach is correct:

GST is a self-assessment tax regime. If a liability is discovered later (whether due to oversight or audit), the taxpayer is expected to voluntarily declare and pay it. Paying the tax in the current GSTR-3B return ensures that the government receives the dues along with the necessary interest, and it allows the taxpayer to regularize their records.

Important Considerations:

• Maintain Records: Always keep a copy of the payment challans and a reconciliation statement (linking the RCM payment to the original invoices from 2017-18) in your internal accounting records. This is vital for any future audits or department notices.

• GST Portal Validation: The GST portal now tracks RCM payments and ITC claims through the RCM Liability/ITC Statement. Ensure that your RCM payments are reflected correctly there to avoid negative balance warnings or filing blocks.

Summary: Discharging old RCM liabilities in a later GSTR-3B is the correct procedure for regularization. Ensure you pay the tax in cash, include the applicable interest for the delay, and claim the corresponding ITC in the same return period. Keep detailed internal records of the transaction for compliance purposes.