ICICI

Reverse charges on GST


Deepak Baghel (Accountant)     18 November 2019

Deepak Baghel
Accountant 
 2 likes  74 points

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Hi Members,

I have a query, my client is an Individual and doing business in Internet industry. He need to pay some software payments to overseas where Reverse charge on GST is applicable. What will be the accounting treatment and GSTR-3B reporting?

I also have some clarification on it. Is is correct?

As per our audit report you have found that we do not have deposited the GST under reverse charge on payments made to overseas.

 

I would like to explain this in detail with the following example:-

 

If I paid Rs. 100 to facebook towards advertisement expenses and facebook is not registered in India

 

1 Facebook Dr 100   Liabiliyt created         
  Facebook Dr 18          
  To HDFC Bank Ltd.    100        
  To IGST Liability    18        
                 
2 IGST Liability Dr 18   Liability Paid        
  To HDFC Bak Ltd.    18        
                 
3 IGST ITC Dr 18            
   To Facebook   18          
                 
4 IGST payble Dr 18   It means I no need to pay Rs. 18 from my normal liability 
  To IGST ITC    18

 

After passing above entries Facebook account will be nil with Rs. 18 and Liability of Rs. 18 will stand in books which we will pay from Bank 

 

Once we will pay it from Bank, we will be eligible for taking INPUT of the same in the same month.

 

We can utilise this input to clear our any liability of GST except reverse charge

 

 

The problem was in accounting entries ( GST Liability under reverse charges was adjusted from INPUT Ledger instead of cash Ledger ) and we have paid GST Liability correctly which is also reflecting in our GST return

 

 

 

 

 

 

avater

Sivaramakumar (GM-ACCOUNTS)     19 November 2019

Sivaramakumar
GM-ACCOUNTS 
 4 likes  137 points

View Profile | My Other Post

IGST    DR ; 18

RCM LIABILITY CR 18   ( CREATION OF LIABILITY)

 

RCM LIABLITY DR   18

TO HDFC                 CR  18  ( PAYMENT OF LIABILITY)

 

YOUR INPUT  REMAINS IN IGST FOR CLAIM.  DEBITING RCM TO  FACEBOOK A/C IS NOT APPRECIATED.


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