RCM Liability/ITC Statement introduced on GST Portal

Summary 

In August 2024, the GST Portal introduced a new RCM Liability/ITC Statement aimed at streamlining the management of reverse charge mechanism (RCM) liabilities and input tax credit (ITC) claims for taxpayers. This feature can be accessed through Services > Ledger > RCM Liability/ITC Statement on the portal and serves to reconcile differences between the RCM liabilities declared in Table 3.1(d) of the GSTR-3B form and the ITC claimed in Table 4(A)(2) or 4(A)(3).

Key Features and Requirements:

1. Opening Balance Reporting: Taxpayers must declare an opening balance in the new RCM statement. This balance reflects any discrepancies between the RCM liabilities declared and ITC claimed in past filings.
2. Adjustments for Past ITC Reversals: The statement also allows adjustments for past ITC reversals under RCM, though these must be reported as separate entries to maintain clear records.
3. Reporting Period:
4. Deadlines:

• A positive balance means RCM liabilities exceeded ITC claims.
• A negative balance means claimed ITC exceeded declared RCM liabilities.
• Monthly filers should report balances based on their July 2024 GSTR-3B filings.
• Quarterly filers should report balances as per Q1 FY 2024-25 filings.
• The deadline for reporting the opening balance is October 31, 2024.
• Amendments to the opening balance can be made until November 30, 2024, with up to three correction opportunities.

Benefits:

This new system simplifies the tracking of RCM-related tax obligations and improves accuracy in ITC eligibility by offering greater transparency and reconciliation options. By helping businesses correct discrepancies and claim ITC more accurately, it reduces the likelihood of non-compliance or incorrect filings.

In August 2024, the GST Portal introduced the RCM Liability/ITC Statement, a new tool designed to help taxpayers manage their reverse charge mechanism (RCM) liabilities and input tax credit (ITC) claims. This new statement follows the introduction of the ITC reclaimable statement from the previous year and is aimed at further simplifying tax reporting and reconciliation for taxpayers dealing with RCM.

Key Features:

1. Reconciliation of RCM Liabilities and ITC Claims: The statement helps reconcile discrepancies between the RCM liabilities declared in Table 3.1(d) of GSTR-3B and the ITC claimed in Table 4(A)(2) or Table 4(A)(3).
2. Opening Balance Reporting: Taxpayers are required to report an opening balance in this new statement:
3. Adjustments: Taxpayers can also adjust for any past RCM ITC reversals, with such adjustments reported separately in the statement for proper tracking.
4. Reporting Timeline:
5. Correction Window: Taxpayers have until October 31, 2024, to report the opening balance, and they can make amendments up to November 30, 2024. There are three opportunities allowed for corrections.

• A positive balance indicates RCM liabilities exceeded ITC claims.
• A negative balance shows that claimed ITC exceeded declared RCM liabilities.
• Monthly filers are expected to report balances based on their July 2024 GSTR-3B filings.
• Quarterly filers should report based on Q1 of FY 2024-25.

Objective:

The RCM Liability/ITC Statement aims to bring better clarity and transparency in managing RCM-related tax obligations and ITC eligibility, much like the ITC reclaimable statement introduced earlier. This new feature reduces errors and simplifies the compliance process for taxpayers under GST, especially those dealing with reverse charge liabilities.

NAVIGATION ON GST PORTAL

Services >> Ledger >> RCM Liability/ITC Statement.

Reporting the Opening Balance in the RCM ITC Statement

When filling out the RCM Liability/ITC Statement introduced in August 2024, it is important to correctly declare the opening balance based on any differences between the RCM liabilities declared in Table 3.1(d) of GSTR-3B and the ITC availed in Table 4(A)(2) or Table 4(A)(3). Here\'s how to handle different scenarios:

1. Excess RCM Liabilities Declared Compared to ITC Claimed:
   • If the RCM liabilities declared in Table 3.1(d) are higher than the ITC availed in Table 4(A)(2) or 4(A)(3) (due to reasons such as ineligibility, missed claims, or RCM paid on advance payments), you should fill the positive differential as the opening RCM ITC in the statement.

Example:

• RCM taxes declared: ₹1,00,000
• ITC claimed: ₹80,000
• Opening balance to be reported: ₹20,000

In this case, since you have declared ₹1,00,000 in RCM liabilities and only availed ₹80,000 in ITC, you need to report the ₹20,000 as an opening RCM ITC balance in the RCM statement.

This allows for proper reconciliation and ensures the correct tracking of unclaimed ITC from prior periods.

Reporting Negative Opening Balance in the RCM ITC Statement

In cases where excess RCM ITC has been availed in Table 4(A)(2) or 4(A)(3) of GSTR-3B, but the corresponding RCM liability has not been paid (i.e., declared in Table 3.1(d) of GSTR-3B), the negative differential must be filled as the opening RCM ITC balance in the RCM statement.

Example:

• RCM ITC claimed: ₹75,000 (in Table 4(A)(2) or 4(A)(3) of GSTR-3B)
• RCM taxes paid: ₹50,000 (declared in Table 3.1(d) of GSTR-3B)
• Opening balance to be reported: ₹-25,000

Since you have claimed ₹75,000 in RCM ITC, but only ₹50,000 was declared as paid in RCM taxes, you should report ₹-25,000 as the negative opening RCM ITC balance in the statement.

This negative value reflects an overclaim of ITC compared to the RCM taxes paid, helping to reconcile and adjust any discrepancies from previous filings.

Reclaiming RCM ITC in the RCM ITC Statement

Where a taxpayer needs to reclaim the RCM ITC that was previously reversed in earlier tax periods through Table 4(B)(2) of GSTR-3B, the eligible RCM ITC can be reclaimed through Table 4A(5) of GSTR-3B. This reclaimed RCM ITC should not be reclaimed through Table 4(A)(2) and 4(A)(3) of GSTR-3B.

As a result, any reversed RCM ITC that is reclaimed should not be reported as an RCM ITC opening balance in the new RCM ITC statement.

Period to Consider for Reporting:

• Monthly filers: Report the opening balance based on the RCM liability and ITC declared up to the GSTR-3B for July 2024.
• Quarterly filers: Report the opening balance based on the RCM liability and ITC declared in GSTR-3B for Q1 of FY 2024-25 (April to June 2024).

This ensures that the opening balance reflects the correct RCM liability and ITC status up to the relevant period.

Due Date to Report the RCM Opening Balance

• Initial Reporting: The original RCM opening balance can be declared up to October 31, 2024.
• Amendments: Any corrections or rectifications of errors in the declared opening balance can be made until November 30, 2024. The GST Portal allows for up to three amendment opportunities within this period to rectify any discrepancies.

Goods and Services Tax
Government of India, States and Union Territories

Introduction of RCM Liability/ITC Statement

Aug 23rd, 2024

To assist taxpayers in correctly reporting Reverse Charge Mechanism (RCM) transactions, a new statement called “RCM Liability/ITC Statement” has been introduced on the GST Portal. This statement will enhance accuracy and transparency for RCM transactions by capturing the RCM liability shown in Table 3.1(d) of GSTR-3B and its corresponding ITC claimed in Table 4A(2) and 4A(3) of GSTR-3B for a return period. This statement will be applicable from tax period August 2024 onwards for monthly filers and from the quarter, July-September-2024 period for quarterly filers. The RCM Liability/ITC Statement can be accessed using the navigation: Services >> Ledger >> RCM Liability/ITC Statement.

Reporting Opening Balance in RCM ITC Statement.

RCM ITC opening balance can be reported by following below navigation:

Login >> Report RCM ITC Opening Balance or Services >> Ledger >> RCM Liability/ITC Statement >> Report RCM ITC Opening Balance

•  In case the taxpayers have already paid excess RCM liabilities by declaring the same in Table 3.1(d) of GSTR-3B however he hasn’t availed corresponding ITC through Table 4(A)2 or 4(A)3 of GSTR-3B, due to any reason, in such cases taxpayer need to fill Positive value of such excess paid liability as RCM ITC as opening balance in RCM statement.

•  In case the taxpayers have already availed excess RCM ITC through Table in Table 4(A)2 or 4(A)3 of GSTR-3B however he hasn’t paid corresponding liability by declaring the same in table 3.1(d) of GSTR-3B, in such cases taxpayer will be needed to fill a negative value of such excess claimed ITC as RCM as opening balance in RCM Statement.

•  In case taxpayer need to reclaim the RCM ITC, which was reversed in earlier tax periods through Table 4(B)2 of GSTR-3B, if eligible, he can reclaim such RCM ITC in Table 4A(5) of GSTR-3B. Please note that such RCM ITC shall not be reclaimed through Table 4(A)2 and 4(A)3 of GSTR-3B. Such RCM ITC reversal need not to be reported as RCM ITC opening balance.

For Opening Balance pls reconcile till tax Period:

•  Monthly filers: Report the opening balance considering RCM ITC till the July-2024 return period.

•  Quarterly filers: Report the opening balance up to Q1 of FY 2024-25, considering RCM ITC till the April-June, 2024 return period.

•  Deadline to declare Opening Balance: Opening balance can be declared till 31.10.2024.

•  Amendments in Opening Balance: Taxpayers can rectify any errors committed while declaring the opening balance on or before 30.11.2024, he shall be provided three opportunities for the same.

This amendment facility shall be discontinued after 30.11.2024.

Thanks,
Team GSTN