Reverse charge st can be claimed as expense?

Queries 513 views 1 replies

Hello Friends,

I have the following query regarding ST paid by Service Receiver under Reverse Charge Mechanism.

If the Service Receiver shows his ST on output service and ST on inputs in P&L A/c, then can he also show the ST paid on Reverse Charge Mechanism in P&L A/c?

Eg: Output Service    10000 ,  ST & Cess on Output Service 1236 <--- both these ledgers are part of P&L A/c
      Input Service        1000     , ST & Cess on Input Service    30.9 (25%) <--- both these ledgers are part of P&L         ST on above input service under RCM  92.7 (75%) <--- can i claim this as expense for IT purpose and general purpose, because if there was no RCM then I could have claimed the entire ST as expense. 

Please Guide.

Replies (1)
It seems you are not taking credit of input tax and credited whole of output tax input tax in p/l. But why have you done so? You should have taken input tax credit and the net balance should have been treated as asset/ liability. However... in case of tax paid under reverse charge.. the same is treated like any other input tax.


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