GST credit on GTA services paid under RCM

[Ashwin Garg]

Dear Experts,

GST on GTA services is payable in cash under RCM on or before 20th of next month.

Whether such GST credit is allowed on payment basis (i.e next month) or credit can be taken in same month (i.e accrual basis).

May kindly reply with relevant section, rules, circular, clarification etc

[KASTURI SETHI]

Credit can be taken only after making payment of GST in cash in the same month. It means ITC is to be taken during the month in which tax paid in cash.

[SHIVKUMAR SHARMA]

Please refer Issue Id: - 113373

[Ganeshan Kalyani]

Pay tax on say, 17th , the cash ledger balance will be increased. Make payment for other liability on say, 18th. The liability to the extent of RCM paid in cash will be set off and balance only will need to be paid. Hence, the credit is available on RCM in the same month.

[KASTURI SETHI]

Right example given by Sh.Ganeshan Kalyani Ji.

[Ganeshan Kalyani]

Thanks you Sri Kasturi Sir.

[Nash Industries I Pvt Ltd]

Show the tax as liability (paid in cash on 20th) and also take the credit of the tax in the same month (before filiing return and adjust against regular output tax). Pay the balance + rcm in cash

Eg Output Tax on Forward Supplies say - 1,00, 000

Tax on RCM , say - 10,000

Total Tax payable - 1,10 000/-

ITC regular - 50000

ITC RCM -10 000 60,000/

Net Tax payable 50,000

Break up

Regular -1,00,000-60,000=40,000

RCM 10,000

Total Tax payable 50,000

Regards

S.Ramaswamy

[KASTURI SETHI]

Very much clear illustration by Sh.S. Ramaswamy.

[Ganeshan Kalyani]

Nicely explaines. It will reduce the working capital burden.

AI Summary

Input tax credit on RCM payments: credit available after cash payment in same month before return filing.
Input tax credit for GTA services under the reverse charge mechanism is claimable only after the recipient pays the RCM GST in cash; once paid the cash ledger increases and the ITC may be taken in the same month and adjusted against output tax in the periodic return.