GST Reverse Charge Mechanism (RCM) in Tally

GST Reverse Charge Mechanism

Normally the Seller is liable to collect GST from buyer and deposit with government. Here we discuss instances where Buyer be liable to pay GST to the Government (referred as RCM – Reverse Charge Mechanism)

We have already explained Reverse Charge on Purchase from unregistered dealer, effective till 12^th October 2018. Here we discuss about Reverse Charge applicable on purchase of Specified Goods and Services.

Purchase of Services under GST Reverse Charge : Certain Services like Road Transport Charges, services by Advocate are under Reverse charge, where recipient to Service are to pay the GST under Reverse Charges. The supplier does not charge GST in their supply Bill. So, the purchase Invoice do not contain GST but a liability to pay GST is created on entry of such purchases.

GST activation for RCM chargeable Expenses Ledger Account Master in Tally

Create Ledger Account (GoT>Accounts Info>Ledger>Create) for Expenses under Reverse Charge.

GST activation for RCM chargeable Expenses Ledger Account Master in Tally

GST set up for Reverse Chargeable Expenses Ledger in Tally

At Ledger Account GST Details screen , at Is Reverse Charges Applicable, set yes. If you do not get the option, at GST Details screen,

At GST Applicable, set yes. At Set/Alter GST, set Yes to get GST Details screen. At Type of supply, select Services (Expenses / Services) / Goods (for Purchase Ledger Account for Purchase of Goods under Reverse Charge).

GST details set up forReverse Chargeable Expenses Ledger Account Master in Tally

GST RCM chargeable Expenses Ledger Account Master configuration in Tally

Click F12:Configure to get GST Details Configuration screen . Set Yes at Enable Reverse Charge Calculation.

GST RCM chargeable Expenses Ledger Account Master configuration in Tally

Purchase Voucher entry for purchase of GST Reverse Chargeable Services in Tally

Create Purchase Voucher (GoT>Accounts Voucher>F9:Purcahse) to get Purchase Voucher screen . Click V:As Invoice toggle button to get the Voucher in Accounting Invoice mode. Select Service supplier Ledger Account. Select the Service Ledger Account and enter the Amount. Select other ledger accounts, if any, a and enter the amount. Enter Narration.

Purchase Voucher entry for Reverse Charge applicable Services in Tally

Click A:Tax Analysis button to view the Tax Analysis screen. Though no Tax amount has been entered in the voucher, the Tax Payable under Reverse Charge is internally computed and shown, A note ‘’Amount of Tax is subject to Reverse Charge’’ is also shown in Tax analysis screen

Purchase Voucher Tax Analysis display for Reverse Charge applicable Services in Tally

Effect of RCM chargeable Purchase in GST Returns in Tally

The Reverse Charge Tax Liability is reflected in GSTR-3B Report.

GSTR-3B: Effect of GST RCM chargeable Purchase in GSTR-3B summary in Tally

RCM chargeable Purchase in GSTR-3B summary display in Tally

GSTR-3B: Purchase of Service under GST Reverse Charge Liability details

RCM chargeable Purchase in GSTR-3B details display in Tally

GST Reverse Charge Liability Accounting in Tally

To adjust and reflect ITC & Reverse Charge liability, create a Journal Voucher debiting & crediting the Tax Accounts (no effect in Accounts).

RCM Adjustment voucher entry in Tally

Enter the Rate & taxable Value to compute Tax Amount. Enter the Tax Amount (the computed Tax amount is not auto carried in Amount column).

Click J:Stat Adjustment to get Stat Adjustment screen .

RCM Adjustment details in Voucher entry

At Stat Adjustment screen, at Nature of Statement, select Increase of Input Tax & Input Tax Credit from the list. At Additional Details, select Purchase under Reverse Charge.

Effect of GST RCM supplies in GSTR-3B display in Tally

The Journal voucher is reflected in GSTR-3B report under Tax Liability Booked column.

Effect of RCM supplies in GSTR-3B Return display in Tally

GST Reverse Charge Liability Payment to Government

Now create a Payment voucher to make Tax Payment. Select GoT>Accounting Voucher>F5:Payment to get Payment Voucher screen . Enter the Tax Ledger and amount in Debit column.

RCM Liability Payment Voucher entry in Tally

RCM payment Details entry in Voucher : Click S:Stat Payment to get Statutory payment screen .

RCM Payment details entry in Voucher in Tally

At Tax Type, select GST. At Period from & To enter the period for which the Reverse Charge payment is being made. At Payment Type, select Recipient Liability.