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

Proportionate input tax credit reversal required where transport services serve taxable and exempt supplies, RCM liability remains payable. Freight/GTA services used partly for taxable and partly for exempt supplies are common input services; input tax credit attributable to exempt use must be reversed proportionately under section 17(2) read with Rule 42. The liability and quantum under the Reverse Charge Mechanism for GTA services remain unaffected by such proportionate reversal. If the claimed credit was utilised, interest liability may arise; only the proportion of ITC corresponding to taxable outward supplies is claimable.