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RCM input tax credit

08 February 2018

we are paying tax on transport bills under RCM. shall take input tax credit in the same month in which bill are accounted? please clarify with provision.

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SAURABH ZAWAR (269 Points)
Replied 08 February 2018

Yes you can take ITC in the same month if you have paid tax under RCM

divyakrishnan (Chartered Accountant) (92 Points)
Replied 08 February 2018

Conditions for availing ITC have been put forth in Section 16(2) of CGST Act

(2) Notwithstanding anything contained in this section, no registered person shall be entitled to the credit of any input tax in respect of any supply of goods or services or both to him unless,––

a.he is in possession of a tax invoice or debit note issued by a supplier registered under this Act, or such other tax paying documents as may be prescribed;

b.he has received the goods or services or both.

Explanation - For the purposes of this clause, it shall be deemed that the registered person has received the goods, where the goods are delivered by the supplier to a recipient or any other person on the direction of such registered person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to goods or otherwise;

c.subject to the provisions of section 41, the tax charged in respect of such supply has been actually paid to the Government, either in cash or through utilisation of input tax credit admissible in respect of the said supply; and

d.he has furnished the return under section 39"

Through condition (c) credit would be allowed only if the tax amount has been paid to the government. However, the said condition is subject to Section 41, which speaks about crediting ITC on provisional basis. Hence, even though the tax, in case on RCM, is paid in the month in which return is being filed (usually the month flowing the one in which expense is incurred) ITC would be available in the month in which it is incurred on provisional basis. The moment the tax is paid with the return filed the credit would get finalised.

Further, we have to note that the GSTR-3B return allows us to set off the ITC of RCM in the same month it is incurred.

Hence, one may come to a conclusion, based on the above discussion, that ITC for RCM cases can be availed in the same month in which inward supply is received.

By applying the above provision in your case, you would be eligible to claim ITC in the same month in which bill are accounted

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