RCM under ISD

[Bhavesh Suthar]

With regard to reverse charge transaction under ISD, kindly confirm below procedure:

1) Invoice dated April '25 issued by supplier on normal registration (RCM).

2) RCM liability discharged by normal registration on 20th May '25.

3) Normal registration raises tax invoice to ISD to transfer RCM ITC to ISD in May'25. This is disclosed in GSTR-1 of May '25 in B2B.

4) ISD distributes the credit to its branches vide GSTR-6 of May '25.

Query 1: Supplier raises invoice to normal registration and not ISD. Is that correct.

Query 2: Normal registration raises invoice to ISD post payment in 3B (i.e. GSTR-1 of May'25). Can this be done in April '25 GSTR-1 itself simultaneously with the liability payment or does it have to be done post payment only in May '25.

AI Summary

Reverse charge mechanism: recipient pays tax and may transfer ITC to ISD only after RCM liability is discharged.
Under GST RCM, the recipient (normal registration) must pay tax and the supplier invoices the recipient, not the ISD. After the recipient discharges the RCM liability and claims ITC in the return for that payment period, the recipient may raise an invoice to the ISD to transfer ITC for distribution. The ISD cannot discharge RCM and only distributes ITC after lawful payment and recognition by the recipient. The internal invoice to ISD and its reporting must follow the period in which the RCM was discharged and ITC claimed, and the tax head should align with the RCM treatment and registration locations.