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TMI BlogTAXES UNDER RCMX X X X Extracts X X X X X X X X Extracts X X X X ..... TAXES UNDER RCM X X X X Extracts X X X X X X X X Extracts X X X X ..... rpose is to plug the leakage of revenue. (ii) More revenue in cash. (iii) Each transaction will be accounted for in the books of accounts. (iv) Supply from unregistered person will be accounted for. (v) It increases number of registrants (vi) It is a facility to those persons who are not required to register under GST are not required to pay GST under RCM. (vii) Those persons supplying servi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces where service recipient is liable to pay GST under RCM, are not required to get registered themselves under GST. Reply By Ganeshan Kalyani: The Reply: Dear Querist, can you please let us know , "how there is no loss of revenue when such taxes are not paid"? Reply By Renju Joy: The Reply: ITC is claimed except by composition dealers Reply By Ganeshan Kalyani: The Reply: Sir, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e tax paid under RCM may not be creditable to some tax payers whose outward supplies are exempt. Also, in case of RCM paid on rent-a-car is ineligible. In all these, the govt. gets the revenue. Reply By Renju Joy: The Reply: No need to pay RCM on exempted services Reply By SRIVALSAN MENON: The Reply: As the experts rightly suggested, the advantages are : 1. Possibility of every transaction g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oing to pass through a checkpoint 2. Bringing in more assessees into compliant business models 3. Smaller invoicers, though not registered under GST can still become contributors to the GST system 4. The data becomes a repository which can be later used by income tax to find out highly granularised incomes adding up to huge values and eventually converting them to IT assessees also 5. Smaller ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... invoicers neednot worry about tax payments but just file the returns alone. 6. Large invoicees need not worry about their small invoicers filing their GSTR 1 so that their 2A is populated correctly or manually follow up on large numbers. There is also a slight injustice here as the system favors fund accumulation with large invoicees during the gestation period which would have otherwise been wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the small invoicers, naturally larger in number and facilitating better economic dynamics in the financial ecosystem. Disadvantages for assessees who provide services on RCM: 1. They will need to wait for long periods for refund of ITC while their input credits accumulate but would not have tax liability. 2. They will lose the opportunity of using a workable float amount which may otherwise h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave remained in their business for some 20 to 50 days.
Disadvantages for the Government:
1. Govt loses a huge amount of float, of course for a time of 1 month, which would have been paid in as GST otherwise. Now that Invoicees can take ITC of the RCM taxes due from them in the same month, there is no actual movement of money into the taxes box. X X X X Extracts X X X X X X X X Extracts X X X X
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