Input credit of gst paid on urd

[Guest]

If we have paid Rs.3,25,000 against our URD liability for the month of July-2017. & again in the month of Aug-2017 we have fresh liability of ₹ 3,50,000/-against URD transactions. so how much tax payment should be done through challan in this month? ₹ 25000/-or ₹ 3,50,000/-? please advise.

[Vamsi Krishna]

RCM shall be paid in cash & can be utilised on payment of output liability.

So in your case you need to dischrage 3,50,000 in cash ledger and can be utilised against output liability.

[Guest]

When we discharged our RCM liability of ₹ 3,25,000/-in July-2017, there was no output tax liability for July-2017. So how this credit will be utilized?

[KASTURI SETHI]

The amount deposited will remain intact if you have no output liability at present. You can utilize it next month or whenever your liability arises. Treat this amount as if lying in your bank account.

[Rajagopalan Ranganathan]

Tax to be paid under RCM for July 2017 is to be paid before filing GSTR3 for the month of July 2017 and this return is to be filed on or before 20.8.2017. Since the date of filing of GSTR3 is being extended you have to pay the tax on or before 20.8.2017. If you pay the tax after 20.8.2017 you have to pay the tax along with interest. Similar is the case for the month of August 2017. The last date will be 20.9.2017.

Whatever amount you pay through bank challan it will be reflected in your Electronic Cash Ledger. You can use this for payment of tax on supplies made by you at any time. There is no time limit for utilising the amount deposited in Electronic Cash ledger.

[DR.MARIAPPAN GOVINDARAJAN]

I endorse the views of Shri Vamsi Krishna

[Guest]

We have discharged our RCM liability for July-2017 on 20.8.17 itself, filed GSTR3-B for July-2017.

But then the amount is not reflecting in our Electronic credit ledger.

we paid the amount on 16.08.2017. it was reflecting in cash ledger on 20.08.2017.we filed GSTR3B. now cash ledger is showing zero balance & credit ledger is showing the balance of ITC accrued through Inputs only. RCM liability that we cleared has not added anywhere.

[KASTURI SETHI]

There is something wrong in checking the system properly. Do you think balance amount should exist after payment of tax ? You may have committed mistake of debiting in cash in stead of ITC account. Pl. Do calculation again overall to arrive at correct amount due and paid in cash as well as credit account.

[Vamsi Krishna]

Pls check your Liability ledger where in you can see.. RCM liability which we have accounted for against RCM both sec, 9(3) & 9(4).

And after payment of the same through cash ledger, your liability shown above has been adjusted.

Now you will have an option in GSTR-2 for credit. Pls wait till dead line of GSTR-1.

Once GSTR-2 window opens, the RCM liability that is paid shall be allowed and added to the input ledger.

[Guest]

@ Vamsi Krishna, checked liability ledger. RCM liability adjusted against cash.

will wait till 10.10.17 for RCM payment done to be added in our credit ledger.

Thanks to all the experts for this valuable information.

[Ganeshan Kalyani]

There is a practise of paying reverse charge liability in cash and availing the credit in the same month. Since you had no liability in the month of July 2017 on sales, you paid GST in cash under reverse charge. You have liability in August 2017. You can claim the credit of the tax paid under reverse .

[KASTURI SETHI]

Agree with Sh.Ganeshsan Kalyani Ji.

[Guest]

but since RCM liability cannot be adjusted against credit, seems no escape from paying tax whenever it arises.

[KASTURI SETHI]

Under RCM first cash has to be deposited. Thereafter you can take ITC.

AI Summary

Reverse charge mechanism requires cash deposit into the electronic cash ledger before claiming input tax credit after reconciliation. Tax paid under the Reverse Charge Mechanism must be deposited in cash into the Electronic Cash Ledger and cannot be adjusted against input tax credit before deposit. Such cash payments remain in the Electronic Cash Ledger until utilised for output liability or until reconciliation and return processes permit conversion into input tax credit; verification of liability and correct accounting entries is required where paid amounts do not immediately appear in the input credit ledger.