• Calculate the amount of tax payable to the government
• Self account the VAT amount as output tax throughout the purchase
• State it in the VAT return
• Claim the input credit if eligible
• Maintain the necessary documents like invoices, vouchers, etc.
Benefits to importers by RCM provisions in Law
The buyer is required to pay Value Added Tax to government on purchases made by him
The input tax for the Value Added Tax paid under the reverse charge can be recovered by the importer.
How an accountant will help to minimize the risk of applying Reverse Charge mechanism
An accountant can help to minimize the risk of applying Reverse Charge mechanism in the following ways:
• Proper recording
• Accurate claiming of Value Added Tax through VAT ‘201’ form
• Arrangement and collection of Import Records
• Proper Tax Filing
