RCM TAX PAID ON IMPORT OF SERVICES

[JAGADISHKUMAR PATEL]

HI SIR/MADAM,

MY QUERY IS

A (REGISTERED IN GST) FROM INDIA SUPPLY ONLINE ADVERTISEMENT SERVICES SPACE. HE PAY TO B (OUT OF INDIA) FOR SOFTWARE PLATFORM RENT WHICH WAS USED BY A.

A WAS PAID RCM ON SOFTWARE PLATFORM RENT AMOUNT @18% .

ON THIS RCM PAID BY A WAS REFUNDABLE OR NOT AND IF REFUNDABLE THEN WHAT BASIS PLEASE SUGGEST ME.

[KASTURI SETHI]

Sh.Jagadish Kumar Patel Ji,

RCM paid by A is not refundable. Since A has exported service and service has been supplied on the basis of rented software. Software is used in supply taxable service(zero rated) outside India. A is entitled to Input Service Credit of IGST paid under RCM on importation of service. Importation of of service is supply as per Section 7(1)(b) of CGST Act.

 

[JAGADISHKUMAR PATEL]

then what about that amount paid RCM igst which was un utilised credit . because of import / export zero reted

[KASTURI SETHI]

Q. Then what about that amount paid RCM igst which was un utilised credit . because of import / export zero rated ?

Ans. Under RCM tax is paid in cash and after making payment of IGST in cash, you can take credit of IGST paid under RCM. In case your credit of IGST remains unutilsed because of export (zero rated supply), you are entitled to refund claim on this ground. Your original query talks of refund of IGST paid under RCM and it is entirely different issue.

You are entitled to refund claim of unutilised ITC. Pl. note that it is not refund of IGST but refund of credit remained un-utlised because of export.

This is not refund of IGST paid against import of service under RCM. See the difference between both situations.

[Ganeshan Kalyani]

Well explained by Sri Kasturi Sir. Infact the querist is confused on IGST paid under RCM on import of service which is not refundable. But since export is without payment IGST (LUT must be having) the input i.e. RCM paid on import is eligible to claim as refund.

[JAGADISHKUMAR PATEL]

in this case under which head RFD-01 will be filed?

AI Summary

Reverse Charge Mechanism IGST used as input tax credit may yield refund of unutilised ITC on zero-rated exports.
IGST paid under the Reverse Charge Mechanism on importation of services used to supply zero-rated exported services can be taken as Input Tax Credit; where that credit remains unutilised because exports are zero-rated without payment, the registrant may claim refund of the unutilised ITC rather than a direct refund of the IGST cash payment, and the appropriate refund form/procedure follows the refund mechanism for unutilised ITC on exports.