What I know?
I know that the liability of Reverse Charge cannot be set - off with ITC and can be only paid in cash. Further, if other conditions are satisfied, such tax paid on RCM basis is also available for payment of output tax liability other than RCM as ITC.
Statutory Provisons
Section 2(82) - “output tax” in relation to a taxable person, means the tax chargeable under this Act on taxable supply of goods or services or both made by him or by his agent but excludes tax payable by him on reverse charge basis.
Thus,
Since ITC can be used only to set off output tax, and output tax excludes RCM, therefore ITC cannot be used to set – off RCM Liability.
Section 2(62) - “input tax” in relation to a registered person, means the central tax, State tax, integrated tax or Union territory tax charged on any supply of goods or services or both made to him and includes—
(a) the integrated goods and services tax charged on import of goods;
(b) the tax payable under the provisions of sub-sections (3) and (4) of section 9; [RCM]
(c) the tax payable under the provisions of sub-sections (3) and (4) of section 5 of the Integrated Goods and Services Tax Act;
(d) the tax payable under the provisions of sub-sections (3) and (4) of section 9 of the respective State Goods and Services Tax Act; or
(e) the tax payable under the provisions of sub-sections (3) and (4) of section 7 of the Union Territory Goods and Services Tax Act,
However, input tax credit of tax payable on RCM basis is available, as per above section.
Assumption - Output tax liability payable on forward charge basis is greater than the Input Tax Credit available on such forward charge.
QUESTION?
Is it possible to first pay tax payable on RCM basis in cash, then to set – off forward charge output tax liability with such tax (cash) paid on RCM basis.? In other words, to claim & avail the tax paid on RCM basis as ITC in the very same month for which such tax was/is paid?
Since, the word payable is used in Section 2(62), as per my interpretation above should be possible. I don’t know the procedure on GSTN Portal about how to avail such credit. Please clarify regarding procedure. Thanks.
CAclubindia
