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

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.