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RCM on provision of expenses

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Srishti

Self Employed

151 Points Posted on 22 October 2020

Is RCM applicable on the provision of expenses (legal fees) that we do on 31st March in our books?

Replies (3)

Quick Summary

This discussion clarifies whether Reverse Charge Mechanism (RCM) applies to provisions for legal fees made on 31st March. The consensus is that RCM liability for GST on legal fees arises not when the provision is booked in the accounts, but at the time of actual payment to the advocate or within 60 days of the invoice date, whichever is earlier. This differs from TDS procedures where deduction occurs upon provision.

JATINDER KUMAR

Accountant

2102 Points Posted on 22 October 2020

Legal fees paid to the Advocate ?

please elaborate your query

Srishti

Self Employed

151 Points Posted on 23 October 2020

I have basically made a provision for the legal fees to be paid to an advocate on 31st March. I want to know whether I am supposed to pay RCM on it in my March Return or am I supposed to pay RCM when I actually remit the amount to the advocate?

In TDS, we deduct and pay TDS even when provision is made. That's why I have this confusion.

charu sharma

36 Points Posted on 23 October 2020

GST liability on reverse charge arise only at time of making payment or with in 60 days from the date of issue of invoice whichever is earlier.
In the given case when provision booked in books .Hence reverse charge liability has not been arised.