Section 16(4) vs RCM

[NARENDER YARRAGORLA]

For the FY 2020-21, we have failed to pay RCM on Freight, Can we pay and claim ITC in FY 2021-22 sir

[PAWAN KUMAR]

Dear sir,

As per my view, since services of Transportation received during 2020-21, Payment of which already made during FY 2020-21 but GST only left to pay to Govt.

Hence acutal time for payment was already lapsed. now you need to pay along with interest and you may claim ITC of GST amount paid, restriction under section 16(4) will not apply. Only there will be interest expense.

[Amit Agrawal]

Please see discussion under Issue Id: - 117652

[PAWAN KUMAR]

dear sir,

i read your reply, it is absolutely fine, ITC is admissible on payment, in case of RCM.

[KASTURI SETHI]

Chances are bleak without litigation.

[Shilpi Jain]

If the other party is the tax department, many things chances are bleak. But the taxpayer can considering his risk appetite take the other way to challenge department of required.

AI Summary

Reverse charge mechanism: late payment with interest can permit input tax credit recovery, though departmental dispute risk remains.
Payment of GST under the reverse charge mechanism for previously received freight services can be regularised by paying the outstanding tax with interest in a later period, and the recipient may claim input tax credit for that tax; however, practical risk of departmental dispute exists and may necessitate litigation depending on the taxpayer's risk appetite.