Question:-23

During the course of Annual Return or Annual Audit of GST, it was found that some of the inward supplies which attracts RCM on which we have to pay Tax on RCM.
Now how we can give such effect under Annual return and Annual Audit.
How to pay tax and how to claim credit ???
Credit should be calimed under which Financial Year ???
Can we first pay tax on RCM and then file our Annual Return and Annual Audit ???

Answer

Facts of the Case: The assessee has not made payment on RCM Liability for the FY 2017 18 till date and also not claimed ITC of the same.

Law Applicable: Section 16(4) of the CGST Act states that:

(4) A registered person shall not be entitled to take input tax credit in respect of any invoice or debit note for supply of goods or services or both after the due date of furnishing of the return under section 39 for the month of September following the end of financial year to which such invoice or invoice relating to such debit note pertains or furnishing of the relevant annual return, whichever is earlier.

Provided that the registered person shall be entitled to take input tax credit after the due date of furnishing of the return under section 39 for the month of September, 2018 till the due date of furnishing of the return under the said section for the month of March, 2019 in respect of any invoice or invoice relating to such debit note for supply of goods or services or both made during the financial year 2017-18, the details of which have been uploaded by the supplier under sub-section (1) of section 37 till the due date for furnishing the details under sub-section (1) of said section for the month of March, 2019

Interpretation: Section 16 states that the last date to claim ITC for a FY shall be the earlier of due date of filing of GSTR 3B for the month of September following the FY or the due date of Annual Return for the FY.

Also, for the FY 2017 18 such date has been extended till the due date of filing of GSTR 3B for the month of March 2019.

Conclusion: In such a case, Tax should be paid on RCM basis as soon as possible along with interest. Also, will not be eligible to claim ITC on such payment as the last date of availing such ITC, i.e., the date of GSTR 3B for the month of March 2019 has passed. Such ITC would lapse.