Telangana GST Act, 2017 – Dealers under Industrial Incentive Scheme (T-IDEA Incentive Scheme, 2014) – Purchasing cotton from farmers and paying tax under reverse charge mechanism – Request for clarification whether tax paid under RCM is eligible for certification in Form A

Cotton Dealers Under T-IDEA Scheme Cannot Include Reverse Charge Tax Payments in Industrial Incentive Certifications

Dealers under the Industrial Incentive Scheme (T-IDEA Incentive Scheme, 2014) who purchase cotton from farmers and pay tax under reverse charge mechanism are not eligible to include such tax payments in Form-A certification for industrial incentives. The Telangana Commercial Tax Commissioner clarified that only net SGST directly paid by taxpayers can be included in Form-A, not amounts paid toward reverse charge mechanism (RCM) liability on cotton purchases. This interpretation aligns with GO.Ms.No.28, which specifies reimbursement covers only 100% net VAT/CST or SGST for a 5-year period from commercial production commencement.