GST Wrongly Paid - ITC

[Ethirajan Parthasarathy]

A business entity, by mistake, pays RCM tax on municipal tax paid. Is it entitled to set-off this as ITC or should they go for only for refund.

[Himansu Sekhar]

Refund is the option.

[KASTURI SETHI]

Tax under RCM is paid in cash. So you must get refund in cash. So better option is filing refund claim on the ground of "Wrongly Paid". Read Rule 86(4A) inserted w.e.f. 23.03.2020 of CGST Rules.

"Rule-86 .[(4A) Where a registered person has claimed refund of any amount paid as tax wrongly paid or paid in excess for which debit has been made from the electronic credit ledger, the said amount, if found admissible, shall be re-credited to the electronic credit ledger by the proper officer by an order made in FORM GST PMT-03.]".

Also go through Circular No.135/05/2020-GST dated 31.3.2020 as amended vide Circular No. 139/09/2020-GST, dated 10-6-2020.

AI Summary

Business Entity Advised to Seek Refund for Mistaken RCM Tax Payment, Citing Rule 86(4A) of CGST Rules A business entity mistakenly paid reverse charge mechanism (RCM) tax on municipal tax and inquired whether it could offset this as Input Tax Credit (ITC) or should seek a refund. Two responses advised that a refund is the appropriate option. One response highlighted that RCM tax is paid in cash and recommended filing a refund claim under the 'Wrongly Paid' category, referencing Rule 86(4A) of the CGST Rules and relevant GST circulars for guidance on the procedure.