Credit Note raised by unregistered person (Import of service) on which tax payable on RCM, Goods and Services Tax - GST

[Rekha Arya]

Eg. From Apr-21 to Feb-22 we had paid RCM laibility on Import of service ( 100 *18% = 18)

In Mar-22 Credit Note is raised pertaining to previous months (50 * 18% = 9)

For Mar-22 RCM other RCM liability would be (10*18%= 1.8)

GSTR-3B doesn't accept negative figures. So we are thinking to adjust this in Mar-22 to the extent possible and carry forward in future months and adjust against future months RCM liability.

1) Is there any timeline to adjust such credit note related to RCM (for eg . 30th November in case of Normal supply credit note is there).

2) Should ITC pertaining to this transaction (50*18%) be reversed in Mar-22 GSTR-3B ? or we can do that in future month as per eg below :

For month Apr-22 RCM Liability = 50 * 18% = 9

Less : Mar-22 adjustment = 50 * 18 % = 9

RCM ITC for APR-22 = 9

- RCM ITC reversal for Apr-22 = 9

Total RCM ITC claimed =0

2) how to report such credit note in GSTR-1 document issue ? - there is only one tab related to RCM - Invoices for inward supply from unregistered person...

Posts / Replies

[Ravinesh Sinha]

U raise invoices under RCM for differential amount and pay tax along with interest for late payment. But in your case , it appears that excess tax has been paid and u want adjustment. Better u file refund excess amount after reversal of the ITC involved otherwise every time there will be dispute as adjustment of not proper for reverse charge payment. If adjust the amount, how would you cliam ITC in the month of adjustment.

[Shilpi Jain]

You could consider to reduce it from your other general outward tax liability.

RCM is being disclosed in the returns separately only for the purpose of disclosure.

It does not mean that RCM tax excess cannot be reduced from any other tax liability.

Disclosure aspects can be taken care while filing GSTR-9 & 9C.

[Shilpi Jain]

Also the credit note is issued by the supplier. So this need not be disclosed in your GSTR-1

[Amit Agrawal]

In my personal view, as you have availed 100% ITC against taxes so paid against services imported under RCM, you should ignore subsequent commercial credit note issued by the supplier. In other words, no adjustment should be carried out while filing return for March, 22 and there-after either against other RCM liabilities or against general outward tax liabilities.

Above are strictly my personal views and same should not be construed as professional advice / suggestion.