What is the need for RCM ?

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Practising CA
8954 Points Posted on 19 July 2020
Under GST law, the gst on payments of certain nature are to be paid om reverse charge basis. and the ITC of the same is also available.

Then, why is it need to first declare the rcm liability and even take credit because effectively no tax gets paid.

Why would government do such? Just for the sake of reporting ?
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On 19 July 2020 at 03:39 Report
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Quick Summary
This discussion explores the necessity of the Reverse Charge Mechanism (RCM) within the GST framework. While RCM involves paying GST on certain services and then claiming Input Tax Credit (ITC), effectively neutralising the tax outflow, the government mandates its declaration. This is primarily to track specific transactions, especially those involving imports or unregistered suppliers, where direct tax collection from the supplier is difficult. RCM ensures tax compliance and revenue collection by placing the onus on the recipient.

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1102 Points Posted on 19 July 2020
Firstly Concept of RCM is earlier available in Service tax , As in Goods and services tax concept of this RCM is carried forward,
Now the trader also have to paid RCM and for there relief refund is given.
Govt. want to trace these activities.
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On 19 July 2020 at 09:16
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Student
23693 Points Posted on 19 July 2020
Agree with Annu Goyal...

RCM is not a New Provision under the GST Regime. The Provision of RCM was introduced in the erstwhile Service Tax Law and the same has been carried forward in the GST Regime.
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On 19 July 2020 at 10:32
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Practising CA
8954 Points Posted on 19 July 2020
So does it mean, if I miss to report and pay for RCM of GTA services, GST officials will ignore the same and not ask us to pay them during GST assessment ???????
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On 19 July 2020 at 10:53
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273 Points Posted on 19 July 2020
First of all one need to understand the basis idea behind RCM concept.

Gov. put only such supply of services in RCM over which they find difficulty in collecting tax like in case of import of service, supplier is in Non Taxable Territory where gov do not have administrative power or simply gst do not apply outside india but bcz gst is destination based tax, import is taxed in India.

so gov notified import of service so that gov can collect tax from recipient.
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On 19 July 2020 at 21:36
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30 Points Posted on 01 August 2020
I,have a query for examole- I am buying some material like scrap material from any UNREGISTERED PARTY is it mandatory for me to make payment of gst amount in rcm,--- and if not then how will I sell my materials to any other party as I have made the paymeny to the UNREGISTERED PARTY in bank or say how will I deal this matter . Please help me as soon as possible.
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On 01 August 2020 at 00:01

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