Many taxpayers often ask, “Can we get input of reverse charge under GST?” The answer is yes. Businesses can claim Input Tax Credit (ITC) on taxes paid under the Reverse Charge Mechanism (RCM). However, this comes with certain conditions and timelines that must be followed strictly.
In this guide, we explain how ITC works under RCM, the process to claim it, and the compliance requirements you should never ignore.
Understanding Reverse Charge and ITC
Under normal GST rules, the supplier collects tax and pays it to the government. In reverse charge, however, the buyer of goods or services pays GST directly.
So the big question is: Can we get input of reverse charge? Yes, because once you pay the tax in cash, you can later claim it as Input Tax Credit. This ITC can then be used to set off your GST liability on outward supplies.
Conditions to Claim ITC on Reverse Charge
The GST law allows ITC on RCM payments, but only if certain conditions are met:
| Condition | Requirement |
|---|---|
| Tax must be paid | GST under RCM should be deposited in cash, not adjusted with ITC. |
| Goods or services received | Buyer must have actually received the goods or services. |
| Proper invoice | A self-invoice must be created if the supplier does not issue one. |
| Returns filed | Claim must be reflected in GSTR-2B and matched in GSTR-3B. |
Because of these rules, the input of reverse charge under GST can only be claimed after actual payment.
Step-by-Step Process to Claim ITC on RCM
To understand better, let’s see how to practically claim ITC:
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Identify the transaction – Check if the purchase falls under the notified list of goods and services under RCM.
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Self-invoice – Create a self-invoice if required.
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Pay GST in cash – Discharge the liability using the cash ledger, not ITC.
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Report in returns – Enter details in GSTR-3B under reverse charge.
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Claim ITC – The same amount can then be claimed as ITC in the following month.
This ensures you remain compliant while still enjoying the credit benefits.
Example: Can We Get Input of Reverse Charge?
Suppose a company pays ₹10,000 GST under reverse charge for legal services.
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Step 1: Pay ₹10,000 in cash.
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Step 2: Report in GSTR-3B.
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Step 3: Claim ₹10,000 as ITC in the next period.
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Step 4: Use ITC to offset GST liability on sales.
So, the tax burden is neutralized because ITC is available.
Common Mistakes to Avoid
When claiming input of reverse charge under GST, businesses often make these mistakes:
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Claiming ITC without actually paying tax in cash.
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Not maintaining proper self-invoices.
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Missing reverse charge entries in GST returns.
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Confusing exempted services with RCM services.
Avoiding these errors ensures smooth compliance.
Conclusion
So, can we get input of reverse charge under GST? The answer is a clear yes. Businesses can claim ITC on taxes paid under RCM, provided they pay the tax in cash first and comply with documentation rules. With proper reporting in GSTR-3B and accurate invoices, you can legally use this ITC to reduce your GST liability.
👉 Need help in managing RCM and ITC claims? Book a free GST consultation with HelpTax.in experts today.