ITC on delayed deposit of RCM

[SUSHIL BANSAL]

Dear experts,

Our client received DRC 01A for FY 2021-22, u/s 73 on dated 09.05.2025 for RCM liability on mining Royalty paid. We have paid the royalty but not deposited the RCM.

Plz guide whether now we can deposit the RCM & claim the ITC. If yes, how to do that.

[YAGAY andSUN]

In the given scenario, since the DRC 01A has been issued under Section 73 of the CGST Act, 2017, it implies that the tax authorities have raised a demand for the non-payment of RCM (Reverse Charge Mechanism) on the mining royalty for the FY 2021-22. Given that the royalty has been paid but the RCM was not deposited, you can still discharge the RCM liability by making the payment along with any applicable interest, if required, as per the provisions of Section 75.

Upon payment of the due tax, you can claim the input tax credit (ITC) on the RCM paid, provided the conditions under Section 16 of the CGST Act are met, i.e., the tax paid is used for the business and the relevant tax invoices are available. To deposit the RCM, you would need to go through the GSTR-3B filing mechanism by paying the RCM tax under the appropriate head (GST under reverse charge).

Post payment, the ITC can be claimed in the GSTR-3B for the corresponding period. Ensure compliance with the timelines specified under Section 73 and Section 75, including the payment of any applicable interest for delayed deposit.

Note: Please also consult with your GST Consultant as this discussion is not an Legal Opinion.

[SUSHIL BANSAL]

Dear Sir,

Thanks for your quick response. My point is whether I can claim ITC of RCM related to FY 2021-22 in the current Fy 2025-26 & further if tax is deposited through 3B, whether the department will accept it. I think they will insist for DRC-03 & if we deposit through DRC 03, how  can I claim ITC.

[YAGAY andSUN]

If Demanded tax is deposited now but prior to issuance of any SCN, then ITC may be availed but if SCN is already been issued then such amount will not be available for claiming or availing ITC as it will be form part of Consumers' welfare fund.

[Shilpi Jain]

Whether paying through GSTR-3B or DRC-03 is not relevant to assess eligibility of ITC. Also consumer welfare fund has no role to play in case of ITC but is relevant only w.r.t. refund claims.

If the royalty is paid to a person unregistered under GST you can issue self invoice now and claim ITC. Ensure other conditions under the law are adhered to, to avail ITC.

AI Summary

Tax Dispute: RCM Royalty Payment Challenges Examined for Retrospective Deposit and Input Tax Credit Eligibility Under GST Regulations A taxpayer received a DRC-01A notice for unpaid Reverse Charge Mechanism (RCM) on mining royalty for fiscal year 2021-22. The discussion explores whether RCM can be deposited retrospectively and input tax credit (ITC) claimed. Experts suggest that tax can be paid with potential interest, and ITC may be claimed if conditions under GST law are met, including proper documentation and timely compliance with tax regulations.