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GST on Rent RCM

09 May 2025

Respected Members,

An Unregistered assessee was charging Rent from a Registered Tenant on Commercial Property. Tenant was paying the GST on RCM till Feb 2025 as Assessee Threshold limit was not crossed. But in March Assessee get itself registered under GST and Charged GST on Invoice as per Forward Mechanism. But in same time Tenant already deposited GST as per Previous practice.
So I want to ask is there any way to adjust the RCM gst paid as this will attract 2 times gst.
Pls advice

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3 Replies

Rama chary Rachakonda (Master in Accounts & high court Advocate email ID:ramachary64@gmail.com voice no:9989324294) (7726 Points)
Replied 10 May 2025

You're facing a situation where the tenant has already paid GST under Reverse Charge Mechanism (RCM) for the rent paid to an unregistered assessee, and now the assessee has registered under GST and is charging GST under Forward Charge Mechanism (FCM). To avoid double taxation, you can explore the following options: Adjustment of RCM GST Paid -

*Claim Refund*: The tenant can claim a refund of the GST paid under RCM, as the same service is now being taxed under FCM. The tenant would need to file a refund claim with the GST authorities. -

*Reclaim GST*: Alternatively, the tenant can request the assessee to issue a credit note for the GST amount already paid under RCM, and the assessee can then issue a new invoice with the correct GST amount under FCM. Procedure -

*Communication*: The tenant and assessee should communicate and agree on the course of action to avoid double taxation. -

*Documentation*: Ensure that all necessary documentation, including invoices, credit notes, and payment receipts, is maintained to support the adjustment or refund claim. Recommendations -

*Consult a GST Expert*: To ensure compliance with GST regulations and avoid any potential issues, consider consulting a GST expert or a chartered accountant. -

*Verify GST Portal*: Check the GST portal for any specific procedures or forms required for claiming a refund or adjusting the GST paid under RCM. By following these steps, you can avoid double taxation and ensure compliance with GST regulations.

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Smart_Tax_Idea._ (C.A advisor) (19 Points)
Replied 10 May 2025

Hi Sourabh ji,

This is a common situation seen when transitioning from RCM to Forward Charge in case of commercial rent.

👉 As per GST Law:

1️⃣ Yes, the tenant can claim the RCM GST already paid as Input Tax Credit (ITC), provided it was paid before the landlord's GST registration.

2️⃣ From the date of GST registration of the landlord (March onwards), the Forward Charge applies, and RCM is no longer applicable.

3️⃣ Since there is no double taxation legally allowed, the tenant should not pay GST twice. If mistakenly done, either:

ITC should be claimed by the tenant for RCM already paid, or
Adjust the next month’s GST payment accordingly (through credit ledger).

💡 A proper reconciliation and documentation is essential in such transitions.

For detailed help and documentation support, feel free to explore our advisory:
👉 GST Consultation Services – Smart Tax Idea

— CA Advisor | Smart Tax Idea

CA Shyam Agarwal (Chartered Accountant) (24 Points)
Replied 10 May 2025

RCM in a particular month will be set off against cash paid. However, ITC on the same is credited to credit ledger, which is available to set off future Output Liabilities. This nullifies the liability. Also, you cannot adjust the RCM Paid.

And whereas incase of Landlord paying under forward charge, you can claim ITC on it, if it appears in your GSTR- 2B.