RCM under GST

RCM under GST

RCM under GST.

Want to learn GST but don't know where to start ? Hey , you are at the right place.

The purpose of this series is not to make you expert in GST but make your basic concepts in GST strong. This series is for people who are starting out in GST. So let's start So today we will Discuss What is RCM ?

Full form of RCM is Reverse Charge Mechanism

First lets understand the normal mechanism of levy of GST, the receiver of goods/services pays the GST to the supplier of goods/ services and such supplier then deposits the GST with the Govt. (after taking the benefit of input tax credit).

However, under the Reverse Charge Mechanism, the GST is paid and deposited by the recipient with the Govt. on behalf of the supplier of service.

Lets now understand 4 important provisions related to RCM

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1. GST paid under the Reverse Charge mechanism would be available for Input Tax Credit if such goods and/or services are used in the furtherance of business. The service recipient (i.e. who pays reverse charge) can avail input tax credit.

2. But note that Input Tax Credit with the recipient cannot be used for payment of Reverse Charge to the Govt.

3.Reverse Charge is also applicable to recipients registered under the Composition Scheme.But No Credit of RCM is available in such cases.

4. RCM is levied on advance payments as well.

I hope you understand the basic concepts of RCM, If not read this article again slowly, or you can also post your queries in comment box.