GST-Introduction of "RCM Liability/ITC Statement"

Often, taxpayers pay GST on inward supplies under the Reverse Charge Mechanism (RCM) but overlook claiming the corresponding credit in the current or subsequent period. Currently, there is no system in place to track the GST paid on an RCM basis and the corresponding credit claimed. To address this issue, GSTN has introduced a new statement called the "RCM Liability/ITC Statement."

Let’s understand the details!

GSTN update dated 23^rd August 2024

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 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 the taxpayer needs 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 be reported as RCM ITC opening balance.

For Opening Balance please reconcile till the 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, they shall be provided three opportunities for the same.

This amendment facility shall be discontinued after 30.11.2024.

Thanks,
Team GSTN

Key points

• RCM Liability/ITC Statement is a statement that will show entries of GST paid on an RCM basis in GSTR 3B and ITC of the same in the current or subsequent period. 
• GST paid on an RCM basis will be taken from GSTR 3B- Table 3.1(d).
• ITC of GST paid on an RCM basis will be taken from GSTR 3B- Table 4A(2) and 4A(3).
• This statement will be auto-updated from GSTR 3Bs of August 2024 onwards for monthly filers and from the quarter, July-September-2024 period for quarterly filers.
• Taxpayers have to report an opening balance of RCM ITC as follows:

1. RCM liability paid in GSTR 3Bs till July 2024, but ITC of the same is not taken till the return of July 2024 should be shown as a positive opening balance.
2. In case the taxpayers have already availed excess RCM ITC, but the corresponding RCM liability is not paid till July 2024 shall be shown as a negative opening balance.

• For Quarterly filers, the opening balance shall be calculated till the April-June, 2024 return period.
• In case the taxpayer needs to reclaim the RCM ITC, which was reversed in earlier tax periods, such RCM ITC reversal need not be reported as the RCM ITC opening balance.
• The opening balance can be declared till 31.10.2024. Taxpayers can rectify any errors committed while declaring the opening balance on or before 30.11.2024, they shall be provided three opportunities for the same. This amendment facility shall be discontinued after 30.11.2024.

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How to Report Opening Balance in RCM ITC Statement?

• Go to www.gst.gov.in and login using valid credentials.
• Go to Services>>Returns>>Returns dashboard.
• Click “Report RCM ITC Opening balance”:

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• Enter the opening balances in each head, tick the checkbox, and submit:

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Conclusion

The introduction of the "RCM Liability/ITC Statement" marks a significant step toward improving the accuracy and transparency of RCM transactions under GST. This new statement will not only help taxpayers ensure proper reporting and claiming of Input Tax Credit (ITC) on GST paid under the Reverse Charge Mechanism but also provide a structured system for tracking these transactions. By capturing the necessary details from GSTR-3B and allowing for the declaration and amendment of opening balances, taxpayers are better equipped to manage their RCM liabilities and ITC claims efficiently. The guidelines and timelines provided by GSTN will further aid in a smooth transition to this new system, ensuring compliance and reducing errors. As we move forward, the RCM Liability/ITC Statement will undoubtedly become a crucial tool for taxpayers in maintaining accurate GST records.

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