Reversal of ITC on account of supplies made on which GST to be paid by recipient under RCM

[Rajesh Kumar]

Sir, a taxpayer engaged in supplies of service some of which are taxable under forward change but some are taxable under RCM where tax to be paid by recipients.

sir I want to know that the amount of supplies made on which tax to be paid by the recipients under RCM , is he liable to reverse the ITC under Section 17 read with Rule 42.

AI Summary

Debate on ITC reversal under GST Reverse Charge Mechanism; Section 17 and Rule 42/43 implications discussed. A taxpayer inquired about the reversal of Input Tax Credit (ITC) on supplies where the Goods and Services Tax (GST) is paid by the recipient under the Reverse Charge Mechanism (RCM). Initial responses indicated no reversal was needed, but subsequent clarifications suggested that reversal is required since the service provider's turnover is not taxed directly, thus necessitating a proportionate reversal of ITC. Opinions varied, with some agreeing that ITC reversal is mandated under Section 17 read with Rule 42/43, particularly if the outward supply is considered exempt for the supplier.