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Issue ID : 119964
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Tax liability/ ITC of RCM transaction for FY 2021-22

Date 02 May 2025
Replies4 Answers
Views 1769 Views
Asked By

In one of case, client have not paid RCM on certain expenses for FY 2021-22. Case is under audit for FY 2021-22. Above transaction involves tax of Rs. 4.5 Lac. Now the ITC of such RCM can be taken by paying the same through April-25 GSTR-3B keeping in view the amended provision of Sec-47A of CGST Rule, 2017.

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Replied on May 2, 2025
1.

Here's a detailed breakdown and our Inputs on your query: -

Background:

  • The client did not pay Reverse Charge Mechanism (RCM) GST on certain expenses during FY 2021-22.
  • The case is under audit for FY 2021-22.
  • The tax amount involved is ₹4.5 lakh.
  • The client is now willing to discharge RCM liability and claim ITC in the GSTR-3B of April 2025.
  • You mentioned Rule 47A of CGST Rule, 2017 — likely referring to the amended time limit for availing ITC.

Legal Basis – ITC on RCM under GST:

Under GST law:

  • RCM tax must be paid in cash (not through ITC).
  • Once paid, ITC can be claimed, subject to the time limits laid down in Section 16(4) of the CGST Act, 2017.

Key Amendment – Section 16(4):

  • Before amendment: ITC on any invoice or debit note had to be claimed by the due date of GSTR-3B for September following the end of the financial year, or before filing the annual return, whichever was earlier.
  • After amendment via Finance Act 2022 (effective 01-Oct-2022): The time limit was extended to 30th November of the next financial year.
  • Finance Act 2023 added Section 47A – but this relates to automatic compounding of late fees, not ITC. You likely meant Section 16(4) instead.

Current Position (as per latest provisions):

For FY 2021-22, the last date to avail ITC would have been:

So, availing ITC in April 2025 is not permissible for FY 2021-22 RCM liability because the time limit has already lapsed.

Conclusion:

  • Your client can and should pay the RCM liability now (₹4.5 lakh) to rectify non-compliance and avoid further interest/penalty.
  • However, ITC cannot be claimed in April 2025, as the time limit to claim ITC for FY 2021-22 expired on 30-Nov-2022.
  • This tax amount will therefore become a cost to the business.
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Replied on May 2, 2025
2.

Sir, I have wrongly mentioned Sec-47A, I am discussing in light of provision of Rule-47A

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Replied on May 2, 2025
3.

I endorse the ponit-wise explanation offered by Yagay Sir

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Replied on May 3, 2025
4.

In case it is a procurement from an unregistered person then issuing a self invoice now and availing credit is possible. 

Issuing invoice after 30 day time limit can be regarded as a procedural violation and cannot deny credit altogether.

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