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India GST Reverse Charge Mechanism (GST RCM) - GST Input and Liability at the time of Purchase Invoice

Manish Mutha on 4/8/2021 12:22:28 PM
All of our Indian clients are taking GST Input Credit and creating GST Liability at the time of posting Purchase Invoice for RCM Transaction (Unregistered Vendors). Currently system is posting entries to GST Receivable Interim and after Payment to Vendor, GST Payable account is Credited and after Settlement Posting, GST Receivable A/c is Debited.

Expectation:
GST Receivable A/c and GST Payable A/c should be accounted during Purchase Invoice only and there should not be any impact during Payment to Vendors.
Category: Geographies and Localization
STATUS DETAILS
Needs Votes
Ideas Administrator

Business Central Team (administrator)

Thank you for this suggestion! Currently this is not on our roadmap. We are tracking this idea and if it gathers more votes and comments we will consider it in the future. Best regards, Business Central Team

Comments

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RE: India GST Reverse Charge Mechanism (GST RCM) - GST Input and Liability at the time of Purchase Invoice

Girish Patnekar on 6/11/2022 12:29:51 PM

Hello Manish,GST under RCM is getting accounted as per GST regulations. GST credit is available only after the amount is paid to tax authorities. As per section 49(4) of CGST Act’2017, ITC can be used for payment of output tax only. Therefore tax under reverse charge can be paid through cash only without availing the benefit of ITC. Therefore system shows this amount separately on the GST Settlement formGST reversal from interim to receivable; on the other hand is available after payment of RCM to govt. and not after payment to vendor. This is the only piece where incorrect accounting is being posted in BCIND.

Category: Geographies and Localization