Summary of ITC Availment for RCM Supplies from Unregistered Persons
GST circular has been issued to provide clarification regarding ITC Availment for RCM Supplies from Unregistered Persons.it is related to the availment of ITC by the recipient on the tax paid by him under RCM in respect of supplies received from unregistered persons.
Businesses can claim the ITC based on when they issue invoices, so if the invoice is issued late the business might also face the penalities under section122 of CGST Act,2017.
- Section 16(2)(a) of CGST Act,2017 states that businesses can only claim the ITC for goods or services they receive if they have Taxinvoice or a debit note from the supplier.
- Section 36(1)(b) of CGST Act,2017 states that the business can claim the ITC on the basis of invoice issued in accordance with section 31(3) (f) of CGST Act subject to the payment of taxes.
- Section 31(3)(f) of CGST Act,2017 states that if business receives goods or services from unregistered person and the business has to pay the tax under RCM, the business must issue the invoice for those goods or services. The unregistered supplier does not issue the invoice. The business must pay the tax in cash on this supply under the RCM.
- Section 16(4) provides time limit to claim the ITC. The timelimit to claim the ITC in case of invoice or debit note is 30th November following the end of financial year to which such invoice or debit note pertains.
- Where the business receives supplies from unregistered person under RCM, the business it self must issue the invoice. The financial year to calculate the ITC claim timelimit will be the year when business issues the invoice not the year when the supply was received. if the business issue the invoice late they must still pay the tax and interest on the delayed payment.
