RCM under GST

Dear Sir/Madam,

We request your advise and views on our below queries:

GST under RCM on overseas freight on import of goods
GST under RCM on import of service (subscripttion)

The above transactions may attract GST under Reverse Charge Mechanism. We are not aware earlier, recently we have come to know it.

If these transactions attract GST, we need to pay GST for the FY2018-19 and 2019-20, If we pay GST in current year for transactions relevant to FY2018-19 AND 2019-20, can we claim ITC under RCM? and can we raise self-invoice in current date / period for the transactions relevant to previous years, so that we can claim ITC.

Is ‘interest’ OR ‘penalty’ OR ‘interest and penalty’ applicable for GST payments making under RCM? because, there is clause in GST that “Minor breaches of tax regulations or procedural requirements and in particulars, and omission or mistake in documentation which is easily rectifiable and made without fraudulent intent or gross negligence, shall not attract any penalty”.

As I mentioned above, evasion of tax is not our intention, because of lack of knowledge we have not paid GST on this transaction, as We are paying GST under RCM on GTA and Security Charges every month.

As we know, if you pay GST under RCM can be claimed as ITC, we would not get any benefit by avoiding payment of tax under RCM, because, we could have claimed it as ITC, when we are paying GST under RCM.

Please share your views.

Regards,

Chandra Kumar.

Email-ID: accounts @ pacpl.com

Hi Chandra Kumar,

Here’s a detailed response to your queries on GST under Reverse Charge Mechanism (RCM) for overseas freight and import of services:

1. GST under RCM on Overseas Freight on Import of Goods

Under GST law, freight for import of goods by sea, air, or land from a person located outside India is subject to RCM.
The importer (recipient) is liable to pay IGST on reverse charge basis on such freight services.
This applies even if the overseas freight provider is located outside India.

2. GST under RCM on Import of Services (Subscripttion)

Import of services, such as subscripttion services from foreign suppliers, attract GST on RCM basis.
The Indian recipient must pay IGST under RCM on these services, unless specifically exempted.

3. Payment of GST for Past Financial Years (FY 2018-19 and 2019-20)

If you have missed paying GST under RCM for these transactions in earlier years, you should pay the tax now as per the provisions.
You can raise self-invoices for those past transactions in the current period to record the liability and claim input tax credit (ITC).
The GST law allows such adjustments in the current period even if the transaction belongs to earlier years.

4. Claiming ITC on GST Paid under RCM for Past Periods

Yes, you can claim ITC for GST paid under RCM, provided all other conditions for ITC are satisfied.
Since you are paying the tax now, you are entitled to claim ITC on the same, reducing your overall tax burden.

5. Interest and Penalty on Delayed Payment of GST under RCM

Interest is payable on delayed payment of GST under RCM as per Section 50 of CGST Act.
However, the penalty provisions can be waived if the breach is minor and without any fraudulent intent or gross negligence, as you mentioned.
Since your non-payment was due to lack of knowledge and not evasion, you may request waiver of penalty while paying interest.
It is advisable to disclose the lapse proactively to tax authorities and request leniency.

Summary

Query	Answer
GST on overseas freight	Yes, IGST payable under RCM by importer
GST on import of services	Yes, IGST payable under RCM
Payment for past FY transactions	Allowed; raise self-invoice and pay tax now
ITC claim on GST paid under RCM	Allowed if all ITC conditions met
Interest and Penalty	Interest applicable; penalty may be waived if no fraud

Recommendation

Immediately pay the outstanding GST under RCM for past years with interest.
Maintain documentation and self-invoices for the same.
Consult your GST officer for penalty waiver, explaining it was an honest mistake.
Moving forward, ensure timely compliance on GST under RCM for imported services and overseas freight.