Credit Note raised by unregistered person (Import of service) on which tax payable on RCM

[Rekha Arya]

Eg. From Apr-21 to Feb-22 we had paid RCM laibility on Import of service ( 100 *18% = 18)

In Mar-22 Credit Note is raised pertaining to previous months (50 * 18% = 9)

For Mar-22 RCM other RCM liability would be (10*18%= 1.8)

GSTR-3B doesn't accept negative figures. So we are thinking to adjust this in Mar-22 to the extent possible and carry forward in future months and adjust against future months RCM liability.

1) Is there any timeline to adjust such credit note related to RCM (for eg . 30th November in case of Normal supply credit note is there).

2) Should ITC pertaining to this transaction (50*18%) be reversed in Mar-22 GSTR-3B ? or we can do that in future month as per eg below :

For month Apr-22 RCM Liability = 50 * 18% = 9

Less : Mar-22 adjustment = 50 * 18 % = 9

RCM ITC for APR-22 = 9

- RCM ITC reversal for Apr-22 = 9

Total RCM ITC claimed =0

2) how to report such credit note in GSTR-1 document issue ? - there is only one tab related to RCM - Invoices for inward supply from unregistered person...

AI Summary

Credit Note for Imported Services Challenges RCM Tax Liability; Adjustments in GSTR-3B and GSTR-1 Debated An unregistered person raised a credit note for services imported, impacting the Reverse Charge Mechanism (RCM) tax liability. The issue involves adjusting the credit note in GSTR-3B, which does not accept negative figures. Participants suggested various solutions: filing a refund for excess tax paid, adjusting the amount against other tax liabilities, or ignoring the credit note due to full ITC already claimed. The discussion also addressed whether the credit note should be disclosed in GSTR-1, with differing opinions on the necessity and method of adjustment in subsequent returns.