Input on RCM Paid in March 2020 related to FY 2018-19

[VARDHMAN DOOGAR]

In recent AAR issued by Rajasthan, GST on director remuneration by whatever name called has to be discharged under RCM of GST Law.

I know there are some legal and technical glitches and disputed whether liability has to be discharged or not keeping in the mind of various judgments and circular issued under the previous Tax Regime.

My question is if RCM is paid in the GSTR-3B of March 2020 or GSTR9/9C of FY 2019-20 related to remuneration paid to a director in FY 2018-19, whether input can be claimed or not?

[KASTURI SETHI]

Yes. ITC can be claimed. Under RCM time of supply of services is date of payment as per Section 13 (3) (a) of CGST Act.

[VARDHMAN DOOGAR]

Hi Kasturi Ji,

Thanks for your reply. I already gone through the provision stated by you.

I believe this provision state the time of supply in case of RCM and it talks about date of payment, date of entry in books of account, etc are the date of related expenses. In my query, it is the date of director remuneration which is already made in FY 2018-19 and hence input can be claimed up to September 2020.

[VARDHMAN DOOGAR]

In my previous reply, I meant September 2019

[KASTURI SETHI]

If you make payment of tax in cash in March, 20, you can take ITC. You must be well aware that self-invoice is also required to be issued under Section 31(3)(f) of CGST Act.

As discussed above, time of supply of service is integrated with payment of tax and also availment of ITC .

[Venkataprasad Pasupuleti]

You shall raise the self invoice for RCM liability of unregistered suppliers in accordance with section 31(2)(f). If you are paying GST now then you shall be raising the self invoice now. The time limit to avail ITC is linked with tax invoice date (in your case falling in current year) thereby you are eligible for ITC on the GST paid under RCM.

[KASTURI SETHI]

It is Section 31(3))f) and not 31(2)(f).

[DR.MARIAPPAN GOVINDARAJAN]

I agree with the views of Shri Venkataprasad.

[PAWAN KUMAR]

Dear sir

As per section 16(4) of CGST Act, a registered person shall not be entitled to take ITCin respect of any invoice or debit note for supply of goods or services after the due date of filing the return under section 39 for the month of September following the end of financial year to which such invoice or debit note pertains or furnishing of relevant annual return, whichever is earlier.

As per the above section, ITC related to FY 2018-19 was admissible up to September 2019 GSTR-3B filing due date, I.e. 20.10.2019.

As per your submission, FY 2018-19 RCM liability is to be discharged during current month, although ITC is admissible, but since time period of taking has been lapsed, you cannot claim ITC of GST paid under RCM as per my view.

[KASTURI SETHI]

In this scenario, self-invoice is the basic document for availment of ITC and ITC can be availed on the strength of self-invoice, if payment of tax is to be made in cash through challan/Electronic Cash Ledger. Both documents are a must. Both are integrated. Under RCM, service recipient is deemed service provider. Time limit is to be computed from the date of self-invoice or from the date of payment. Hence not hit by time limitation.

[PAWAN KUMAR]

Dear Sir,

Please correct if i am wrong, Self invoice in case of goods or services received from unregistered supplier, is required to be issued at the time of receipt of goods or services. In case of directors remuneration booked on 31.03.2019 then invoice was required to be issued during 31.03.2019 and accordingly GST was required to be paid during April 2019, since time of supply is proved as per 13 (3(a) of CGST act. No other remedy is available for claim of ITC than section 16(4) of CGST Act. this limit is applicable for all cases as per my view.

[Rachit Agarwal]

As per Section 13(3) of CGST Act, 2017

(3) In case of supplies in respect of which tax is paid or liable to be paid on reverse charge basis, the time of supply shall be the earlier of the following dates, namely:––

(a) the date of payment as entered in the books of account of the recipient or the date on which the payment is debited in his bank account, whichever is earlier; or

(b) the date immediately following sixty days from the date of issue of invoice or any other document, by whatever name called, in lieu thereof by the supplier:

Time of supply of service is earlier of clause (a) and clause (b). If the document issued by supplier is of date 60 days before the date of payment, then the date of payment shall not be construed as the time of supply of service.

Hence Self Invoice to be issued within 60 days from the document date of supplier if the payment is not made within 60 days of the document issued by the supplier and time limit as prescribed in Section 16(4) to be complied.

Section 16(4)- A registered person shall not be entitled to take input tax credit in respect of any invoice or debit note for supply of goods or services or both after the due date of furnishing of the return under section 39 for the month of September following the end of financial year to which such invoice or invoice relating to such debit note pertains or furnishing of the relevant annual return, whichever is earlier.

In our view Section 16(4) shall apply to Self Invoice as the provision does not make any distinction between the Invoice issued by the Supplier or Recipient.

[SHARAD ANADA]

Refer Para g of Press release dated 3rd July 2019 (Clarification regarding Annual Returns and Reconciliation Statement) issued by CBIC in this regard. I reproduce the same for your ready reference

g) Reverse charge in respect of Financial Year 2017-18 paid during Financial Year 2018-19: Many taxpayers have requested for clarification on the appropriate column or table in which tax which was to be paid on reverse charge basis for the FY 2017-18 but was paid during FY 2018-19. It may be noted that since the payment was made during FY 2018-19, the input tax credit on such payment of tax would have been availed in FY 2018-19 only. Therefore, such details will not be declared in the annual return for the FY 2017-18 and will be declared in the annual return for FY 2018-19. If there are any variations in the calculation of turnover on account of this adjustment, the same may be reported with reasons in the reconciliation statement (FORM GSTR-9C).

[PAWAN KUMAR]

Dear Sir,

press release dated 03.07.2019 issued for quoting transactions related to FY 2017-18 which accounted/paid during FY 2018-19, how to treat those transactions in GSTR-9/9C subject to condition that goods/services received during the financial year itself.

If i am not wrong, ITC availament limit up to 31.03.2019 was also allowed for any ITC which left out.

Accordingly if any transaction is related to FY2018-19, you may pay the GST with interest and claim ITC up to September2019, not later than this date.

In case the GST is paid now which is related to FY2018-19 with interest, it will cost to the payer, ITC will not be admissible.

[Pavan Mahulkar]

If you pay the TAX on RCM basis vide DRC-03,

Then you may claim the ITC because as per clause i of sub-section 2 of section 17

The ITC could not be claimed on

(i) any tax paid in accordance with the provisions of sections 74, 129 and 130.

& If the tax is paid in accordance with section 73 vide DRC-03

I THINK ITC can be claimed

[Pavan Mahulkar]

It should be kept in mind that, we can pay the TAX voluntarily vide DRC-03

or by initiation of proceedings u/s 73

As time barring for claim of ITC and that of proceedings u/s 73 didn't match,

Infact time barring u/s 73 is much later,

ITC can be claimed if paid in accordance with section 73..

[KASTURI SETHI]

Dear Pavan Madhulkar Ji,

I have observed that you always intervene only when you are dead sure. You dive into depth.

[Pavan Mahulkar]

@Kasturi Sir,

Thanks for your motivational words..

AI Summary

Time of supply under reverse charge governs ITC entitlement; self invoice and statutory September cut off determine admissibility. Claiming input tax credit for reverse charge tax paid later for earlier director remuneration depends on RCM time of supply-tied to payment or the sixty day rule-and the requirement to issue a self invoice. However, a statutory cut off prohibits availing ITC after the due date of the September return following the relevant financial year or after filing the annual return, so ITC may be barred if that deadline for the earlier year has passed despite payment and self invoicing in the current period.