Clarification on Time Limit for RCM Supplies from Unregistered Persons u/s 16(4) of CGST Act, 2017

Last updated: 27 June 2024

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This notification clarifies the rules regarding the time limit for claiming Input Tax Credit (ITC) when receiving supplies from unregistered persons under the Reverse Charge Mechanism (RCM). It addresses situations where recipients initially don't pay RCM tax or issue an invoice, but later do so after clarification or audit, and then seek to claim ITC on the tax paid.

F. No. CBIC-20001/4/2024-GST Government of India Ministry of Finance Department of Revenue Central Board of Indirect Taxes and Customs GST Policy Wing **** North Block, New Delhi Dated the 26th June, 2024 To, The Principal Chief Commissioners/ Chief Commissioners/ Principal Commissioners/ Commissioners of Central Tax (All) The Principal Directors General/ Directors General (All) Madam/Sir, Subject: Clarification on time limit under Section 16(4) of CGST Act, 2017 in respect

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FAQ :

The notification clarifies the applicability of the time limit under Section 16(4) of the CGST Act, 2017, for claiming input tax credit (ITC) on supplies received from unregistered persons where tax is paid under the Reverse Charge Mechanism (RCM).

RCM stands for Reverse Charge Mechanism, where the recipient of goods or services is liable to pay the tax, rather than the supplier.

It addresses scenarios where a recipient receives supplies from unregistered persons, pays tax under RCM, but later claims ITC on that tax paid, and seeks clarity on the time limit for this claim.

A recipient might pay RCM tax later due to their own initiative, a departmental clarification, a court judgment, or if pointed out during a tax scrutiny or audit.

The notification seeks to clarify the applicability of the time limit under Section 16(4) for these specific RCM scenarios. For the full details and definitive guidance, please refer to the attached notification.