GST on Expenses

[Asked by Guest]

daily limit of an expense from URD do not cross the limit of ₹ 5000/- but if we are paying it on monthly basis GST applicable? like water tanker service availed per day are below 5000/- but same is paid at the end of the month which cross the limit of 5000/- please advise.

[Himansu Sekhar]

There will be no tax. But please check this limit is the aggregate of all urd expenses, not for single bill of a day.

[Ganeshan Kalyani]

If you are paying water charges on daily basis based on the invoice issued by the water supplier on daily basis then GST is not applicable. If paid on monthly basis based on monthly bill then GST is applicable. Further if you are having sale of taxable goods then instead of getting daily bill you can continue to get monthly bill, pay GST under reverse and subsequently claim input tax credit.

[Ganeshan Kalyani]

Some experts opine that claim of tax paid under reverse charge is available for utilisation in the same month. However there is no clarificatory notification from government. Thanks.

[KASTURI SETHI]

There is no such restriction for same month. ITC can be taken in the same month and thereafter also i.e. next month and so on.

[Himansu Sekhar]

The credit will be available in the same month even if it is paid in the next month. I have seen several tweets by cbec in this regard.

[KASTURI SETHI]

Dear Himanshu Ji,. What is legal status ? Make search and clarify. Thanks.

[DR.MARIAPPAN GOVINDARAJAN]

The threshold limit for expenses from unregistered dealer is ₹ 5000/-. It is applicable to each day of the month. Invoice is to be received on each day. If you receives invoices on monthly basis then GST will attract on reverse charge basis.

[Ganeshan Kalyani]

Sri Kasturi Sir and Sri Himansu Ji, i fully agree with both of you, an experts. I too have seen in tweet it was mentioned that credit of the tax paid under reverse charge can be claimed in the same month. However, it is worth appreciation that tweet is not a legal valid document. To my understanding it is for educational purposes . In one of the tweet it was apparently written that government clarification is expected.

we are receiving the invoice at the end of the month & same is paid at the end of the month. so from the comments above seems, we have to pay GST on the same.

thanks to all the experts for the information shared.

[Himansu Sekhar]

I was astonished with the tweets. But on many occasions, it was repeated. Unlike service tax, there is no restriction in gst as the bills will be raised by the receiver. It appears tweets are correct as the self invoices are raised in gstr1. Humbly appreciates the differences in the opinions. Churning of issues gives the result. Legal issues are always subject to debates.

[KASTURI SETHI]

Sh.Himansu Sekhar Ji,

If there is no difference of opinion, we are blocked and there will be no scope for further improvement in any field. Difference in opinion is always welcomed. It l acts as torch bearer. Such approach is also in the interest of assessee s as well as experts' fraternity.

AI Summary

GST on unregistered supplier expenses triggers reverse charge when monthly invoices aggregate beyond the prescribed threshold, affecting input tax credit.
GST applies under the reverse charge mechanism where supplies from an unregistered dealer are invoiced monthly and the monthly invoice aggregates daily supplies beyond the prescribed per day limit; daily invoices below the limit do not attract tax at the receiver. Input tax credit on tax paid under reverse charge is discussed as generally claimable in the same month that tax is paid or accounted for, subject to formal clarification from revenue.