[Opinion] GSTR-3B’s New RCM ITC Check | Reconcile & Validate Your RCM Reporting in GSTR-3B

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  • Last Updated on 29 August, 2024

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RCM ITC statement in GSTR 3B

Ajay Kumar Maggidi – [2024] 165 taxmann.com 710 (Article)

Background

The Goods and Services Tax Network (GSTN) has introduced a new feature to streamline the reconciliation and accurate reporting of Reverse Charge Mechanism (RCM) values in GSTR 3B. Effective from August 2024, the RCM ITC statement is designed to enhance transparency, accuracy, and efficiency in managing input tax credit (ITC) claims related to RCM transactions.

What is the issue and why were the changes Introduced by the government?

We report RCM output tax liability in table 3.1(d) of GSTR 3B.

RCM output tax liability

At the same time, we avail the ITC on such RCM liability in table 4 of GSTR 3B.
ITC on such RCM liability
The GST department identified an issue where excess RCM ITC could be claimed compared to what is reported in the RCM liability section, specifically in Table 3.1(d) of GSTR-3B. To address this loophole and prevent the over-claiming of RCM ITC, the department has introduced a new RCM ITC statement.
This RCM ITC statement functions like a ledger, tracking the RCM liability reported and the RCM ITC availed. It calculates the balance as follows:
Opening Balance + (RCM Liability – RCM ITC).
If the result of this equation is negative, it indicates an over-claim of ITC, and the system will trigger an error message.
Opening Balances: Taxpayers must report opening balances as of July 2024. From August 2024 onwards, the previous month’s closing balance will become the opening balance for the respective months.
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