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RCM accounting treatment

CA Final 1066 views 5 replies
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6 Points Posted on 30 July 2019
Why is RCM treated as Current Assets in the books instead of Booking it as expense or showing it as liability?
RCM is not an expense but liability which is to be paid by us.
What is the rationale for the same?
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On 30 July 2019 at 16:46 Report
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Assistant Manager
224 Points Posted on 30 July 2019
tax payable under RCM is your current liabilities and. if you can avail ITC after payment under RCM then same amount will be go to your ITC leadger which is generally under current assets
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On 30 July 2019 at 17:32
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Practice
4510 Points Posted on 30 July 2019

Agree With Gupta Ma'am

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On 30 July 2019 at 18:19
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6 Points Posted on 30 July 2019
Agreed. I wasn't clear in my question. Why do we pass entry for RCM as
Tax on RCM (Current Asset) Dr
To CGST payable
To SGST Payable
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On 30 July 2019 at 18:21
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Practice
4510 Points Posted on 30 July 2019

Because RCM liability First Required to Pay in Cash 

Then Avail credit

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On 30 July 2019 at 18:31
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6 Points Posted on 06 August 2019
Okay, understood. Thank you so much
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On 06 August 2019 at 13:07


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