Applicabality of RCM-GST

[S.C. WADHWA]

Dear Expert,

GST Being Paid on RCM Basis On Freight of Preservative Used Both in Taxable And Exempted Goods.

We are also availing full ITC. Whether it is correct and if not then how to pay GST on RCM.

Please give your expert opinion.

Regards,

Wadhwa

[Amit Agrawal]

Subject GTA services are common input services which are used by the registered person partly for effecting taxable supplies and partly for effecting exempt supplies.

Accordingly, proportionate reversal u/s 17 (2) of the CGST Act, 2017 read with Rule 42 of the CGST Act, 2017 is required against such input-services.

W.r.t. the next element of the query about 'how to pay gst under RCM' in given scenario, kindly note that liability & quantum to pay GST under RCM against GTA services is not impacted / reduced merely because same is common input services u/s 17 (2).

P.S. Aggressive interpretation for the words u/s 17 (2) to the effect that 'used partly for effecting taxable supplies and partly for effecting exempt supplies' (in other words, scope / limitation of the word 'for effecting', if any) is ignored for above post.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[Shilpi Jain]

Compute ITC in proportion of exempt turnover and reverse to that extent. Also interest liability will arise if this credit was utilised.

Details of period of availment not provided.

[Ganeshan Kalyani]

RCM paid on transportation is eligible for claiming credit to the proportionate of taxable outward supply.

AI Summary

Understanding Reverse Charge Mechanism in GST: Section 17(2) and Rule 42 Impact on Freight Services and ITC Reversal A discussion on the applicability of Reverse Charge Mechanism (RCM) under GST was initiated by an individual seeking advice on paying GST for freight on preservatives used in both taxable and exempted goods while availing full Input Tax Credit (ITC). The responses highlighted that freight services are common inputs used for both taxable and exempt supplies, necessitating a proportionate reversal under Section 17(2) and Rule 42 of the CGST Act, 2017. It was advised to compute ITC based on exempt turnover and reverse accordingly, with potential interest liability if the credit was utilized. RCM paid on transportation is eligible for credit proportionate to taxable supplies.