ITC on RCM

[VishnuPriya R]

As per latest Circular 211/8/2024, they have clarified that the time limit for availing ITC for RCM paid for unregistered person is the financial year in which self invoicing is raised.

Can this be applied for the RCM paid on inward supplies received from registered person also.

For example- The supplier is registered and files the outward supplies as 'Supply attracts RCM', then it refleted in GSTR 2B. But however taxpayer paid in CGST and SGST instead of IGST for a particular supply in FY 2020-21. Now in FY 2024-25 department finds out the mistake and demands the IGST but without interest u/s. 77 but with penalty. Can this IGST paid under RCM be availed as ITC in the year of payment?

Any solutions. Thanks in advance

[Shilpi Jain]

In case of registered person, the date of issue of invoice by supplier will be the relevant date. The clarification given will not apply.

[Shilpi Jain]

Wrong tax payment by supplier should not affect your ITC claim initially (if claimed). So in case you had initially claimed C + S then dept cannot deny that credit now stating it is wrong tax payment.

[Ganeshan Kalyani]

Circular 211/8/2024 is not applicable to RCM paid on inward supply from registered supplier.

[Padmanathan KV]

You should stress more on the aspect of revenue neutrality. 

AI Summary

ITC on reverse charge: invoice date governs entitlement for inward supplies from registered suppliers; circular clarifications inapplicable. For inward supplies from registered suppliers under reverse charge, the relevant date for availing Input Tax Credit is the date of issue of the supplier's invoice; Circular 211/8/2024's time limit clarification for unregistered persons does not apply. An incorrect tax payment by the supplier should not by itself invalidate an ITC claim originally availed, and revenue neutrality and invoice date principles guide the year of recognition for ITC when departments later raise demands with penalty.