Belated GST Payment under RCM - Eligibility of ITC in the year of payment

[Pradeep Singhi]

Sir,

During the F.Y 2018-19, service was received from lawyer & was also recorded in the books of accounts. However, GST liability under RCM on the said services was not paid, neither any self invoice was issued. This issue was identified in the current year i.e F.Y 2022-23.

Now, we have queries with regards to the above mentioned issue as follows:

1. Whether ITC is eligible if payment of RCM is done in current year i.e F.Y 2022-23?

2. If yes, what is the best way to reflect this transaction in our returns to avail ITC?

3. If we pay GST (RCM) vide DRC-03 selecting F.Y 18-19 & avail ITC in GSTR-3B, whether ITC will be eligilbe or not?

4. If we pay GST (RCM) vide GSTR-3B in current year & avail ITC in same 3B return, whether ITC will be eligilbe or not?

AI Summary

Reverse charge ITC eligibility hinges on timing of self-invoice; paying RCM in current return better preserves the claim.
Eligibility for Input Tax Credit on belated reverse charge tax is contested: some experts treat entitlement as tied to issuance of a self-invoice and permit credit if tax and self-invoice are made in the current period; statutory timing and self-invoice rules linking issuance to receipt may, however, render such claims time-barred. Practically, paying RCM in the current period's return and claiming ITC in the same return is advised to preserve the claim, while selecting the earlier fiscal year in a belated payment form may weaken the position and increase litigation risk.