A company had paid its RCM liability under works contract on the basis of Advance Payment made to the contractor and the same have been shown under ST3. Actual work done and invoice received subsequently were less than the amount paid to the contractor.
What all needs to be done in this case, for the extra amount discharged under RCM to the government ?
Company Can Adjust Overpaid RCM Liability or Claim Refund; No Separate Notification Needed per Rule 6 (4A) & (4B). A company overpaid its Reverse Charge Mechanism (RCM) liability under a works contract due to advance payments exceeding the actual work done. To address the excess payment, it can either adjust this amount against future service tax liabilities or claim a refund from the tax department. The company does not need to inform the department separately, as the adjustment can be reflected in the ST-3 return. Rule 6 (4A) and (4B) of the Service Tax Rules, 1994, guide this process, ensuring the excess payment is not due to misinterpretation of law or exemptions. (AI Summary)
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