The Reverse Charge Mechanism (RCM) is a provision under Goods and Services Tax (GST) where the recipient of goods or services is liable to pay the tax instead of the supplier. This shifts the tax liability from the seller to the buyer in specific scenarios, typically involving unregistered suppliers or certain designated categories of goods and services.

Key points about RCM include:

1. Applicability: RCM applies in cases such as services provided by a non-resident, services from unregistered suppliers to registered businesses, and specific sectors like construction and transportation.

2. Tax Payment: The recipient must calculate and pay the applicable GST directly to the government and is also eligible to claim input tax credit for the tax paid under RCM.

3. Compliance: Recipients must comply with filing requirements and maintain proper records to ensure accurate reporting and payment of tax.

The mechanism aims to enhance tax compliance and ensure that tax liabilities are met, particularly in sectors where tax evasion is more likely.

Ineligible Input Tax Credit (ITC) refers to the GST credit that a taxpayer cannot claim for certain goods or services purchased, as specified by the Goods and Services Tax (GST) law. This restriction is put in place to prevent misuse of credits and ensure that only legitimate business expenses are offset against output tax liability.

Common categories of ineligible ITC include:

1. Personal Expenses: Goods or services used for personal consumption rather than for business purposes.
2. Non-Business Use: Inputs not related to taxable supplies or exempt supplies.
3. Specific Exclusions: Items such as motor vehicles (unless used for specific purposes), food and beverages, and certain services like membership in clubs or organizations.

Understanding ineligible ITC helps businesses ensure compliance and accurately compute their GST liability, preventing potential penalties and disputes with tax authorities.

Blocked Input Tax Credit (ITC) refers to the GST credit that cannot be claimed by taxpayers on certain goods and services as specified by the Goods and Services Tax (GST) law. This mechanism is designed to prevent taxpayers from offsetting tax liabilities on expenses deemed unrelated to their business activities or that are not considered legitimate business inputs.

Common categories of blocked ITC include:

1. Personal Use: Goods and services used for personal consumption rather than business purposes.
2. Certain Exempt Supplies: Inputs used for making exempt supplies, such as certain financial services or agricultural products.
3. Specific Exclusions: Items like motor vehicles (unless used for specific purposes), food and beverages, and services related to membership in clubs.

Understanding blocked ITC is crucial for businesses to ensure compliance with GST regulations and accurately calculate their eligible tax credits, thereby avoiding potential penalties.

An advance ruling under the Goods and Services Tax (GST) framework is a legal opinion provided by tax authorities on the applicability of GST laws to specific transactions or situations. It allows taxpayers to obtain clarity on complex tax issues before undertaking a particular transaction.

Key aspects of advance rulings include:

1. Request Process: Taxpayers can file an application to the relevant authority seeking a ruling on issues such as classification of goods or services, tax rates, and eligibility for input tax credit.

2. Binding Nature: The ruling is binding on both the applicant and the tax authorities, providing certainty and reducing the risk of disputes related to the specified transaction.

3. Timeframe: The authorities typically must issue the ruling within a specified period, ensuring timely guidance for taxpayers.

Advance rulings help businesses make informed decisions and plan their tax liabilities effectively, enhancing compliance and reducing uncertainty in GST matters.

A GST audit is a systematic examination of a taxpayer’s GST compliance, including their records, returns, and related documents, to ensure adherence to Goods and Services Tax laws. The audit can be conducted by tax authorities or internal auditors and aims to verify the accuracy of tax calculations and compliance with regulatory requirements.

Key aspects of a GST audit include:

1. Types of Audits:

   • Statutory Audit: Conducted by tax authorities, typically for businesses with a turnover exceeding a specified threshold.
   • Internal Audit: Performed by the taxpayer’s own audit team to ensure compliance and identify discrepancies.

2. Scope of Audit: The audit may involve reviewing sales and purchase records, tax returns, input tax credits claimed, and other financial documents.

3. Objectives: To ensure that the correct amount of GST has been paid, to verify the accuracy of filed returns, and to identify any potential tax liabilities or areas of non-compliance.

4. Consequences: Findings from a GST audit can lead to adjustments in tax liability, penalties, or further investigations if discrepancies are found.

Overall, a GST audit helps maintain transparency, ensures compliance with tax laws, and minimizes the risk of tax evasion.