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RCM on exempted purchase related expenses.

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Hitesh rawal

402 Points Posted on 27 January 2020

What if the RCM is done when we are dealing in both taxable and exempt goods and by mistakely we paid RCM on exempted goods related expense so whether tax refund is eligible or not in annual return as RCM is paid on Exempted goods related expenses.

Replies (7)

Quick Summary

This discussion addresses the scenario where Reverse Charge Mechanism (RCM) tax was mistakenly paid on expenses related to exempted goods. While RCM is generally applicable to certain services regardless of whether the goods are taxable or exempted (e.g., GTA services), specific exemptions exist. For instance, services from GTA for transporting exempted goods are themselves exempt from RCM. If RCM has been incorrectly paid on such exempted services, the deposited tax lying in the Electronic Cash Ledger can be claimed as a refund by filing RFD-01 online.

Anup Agarwal

1184 Points Posted on 27 January 2020

Wherever RCM is applicable on services, it shall be paid without differenciate that goods are exempted or not exempted.

For example - If we assume Goods Transportation Agency Service.

Even if you are taking service for Exempted goods or taxable goods... GST Under RCM shall be paid.
but ITC Shall be taken only for taxable goods part.

Hitesh rawal

402 Points Posted on 27 January 2020

But as per gst rules RCM on freight related to exempt good is exempt but its not taxable in this case what if by mistake made rCM on exempt goods

Anup Agarwal

1184 Points Posted on 27 January 2020

There is nothing such written.
exemption Is-
If aggregate turnover of a person is below the link for which he is not required to get registration under GST law, then the person shall be exempted from RCM.

Pankaj Rawat

GST Practitioner

55067 Points Posted on 28 January 2020

Dear Hitesh Rawal
Yes you are absolutely correct . In term of Notification 9/2017 IGST (R) , RCM is not applicable on Services from GTA against transportation of Exempted goods , ie agriculture products. It's Exempted Services hence No RCM Applicable.

So if the RCM is deposited for the same is still lying in ECL , then yes you can claim refund for the same by filing RFD01 online on portal