INPUT TAX CREDIT BLOCKED U/S 17(2) & 17(3) OF CGST ACT 2017

[SOPL SOPL]

Dear Sir/Madam

We are Gst registered Sole proprietorship concern providing security services to our clients through third party security agency.Security agency being non body corporate raise Rcm invoice on us and we raise Rcm invoice on our client being Gst registered person located in taxable territory.

As per Sec 17(2) read with Sec17(3) ,among other things, input tax credit is not allowed if the outward supply is chargeable under reverse charge.Due to this we are loosing input tax credit paid under rcm basis even in trading of service which should not be the motive of the Gst law.

AI Summary

Security Service Provider Challenges Input Tax Credit Issues Under CGST Sections 17(2) & 17(3) Due to Reverse Charge Mechanism A sole proprietorship providing security services through a third-party agency is facing issues with input tax credit under Sections 17(2) and 17(3) of the CGST Act 2017. The concern arises because input tax credit is blocked when the outward supply is chargeable under reverse charge mechanism (RCM). Two responses suggest potential solutions: acting as a facilitator to charge GST only on the margin and reconsidering the business model to address the credit lapse due to RCM.