Reverse Charge | Purchase Reverse Charge Entry | How to make reverse charge entry | RCM

Reverse charge has been suspended for few cases like goods purchased from URD but for transport service, you still need to make reverse charge entry.

1. Make Purchase voucher and choose Purchase Reverse Charge from dropdown, don't add any tax. Make sure whatever service you choose, you have selected Default Tax Account for the same.

2. These will be reflected in GSTR3B

3. Now we need to show this tax amount in Balance Sheet and book our liability, for that we'll create journal entry for Increase Of Tax Liability.

4. Check Balance Sheet, this amount will be added in liability side.

5. Now while paying tax to government, you need to make Expense entry and this will also remove your liability from Balance Sheet automatically.

6. But we still have Tax On Reverse Charge on asset side.

It should be available as Input Credit for us.

For that we'll again make Journal entry for Increase In Input Tax Credit

So now Balance Sheet will show you this amount as input credit available

This amount will also be available in Eligible ITC section of GSTR3B also.