Received SCN from GST Dept. They asked to clarify RCM liability on expenses like Freight, Power & Fuel, Salary, Labour Charges, Staff Welfare, Insurance, Traveling, Conveyance, Telephone, Audit Fee, Accounting, Legal, Misc., Shop, Bank Charges, Printing & Stationery.
Also asked to explain treatment of Rebate & Discount received with evidence.
?? Which of these expenses actually attract RCM? And how to justify rebate/discount before dept?
Reverse charge applies only when law or notification makes recipient liable or supplier is unregistered; document discounts and credit notes Reverse charge applies only where law or notification specifically makes the recipient liable or where the supplier is unregistered as required by GST rules. Routine expenses such as salaries, staff welfare, printing, bank charges, telephone, conveyance and most office overheads ordinarily do not attract RCM unless supplied by an unregistered vendor or specifically notified. Certain services (for example notified categories like specified legal/transport/security/agency services under applicable notifications) may attract RCM. Rebate or discount reduces the taxable value if given before or at the time of supply; post-supply discounts require issuance of a credit note and adjustment in returns. Maintain contracts, invoices, supplier registration status, credit notes and payment records to justify treatment to the department. (AI Summary)
TaxTMI 
TaxTMI 
