Dynamics Community Forum Thread Details

RCM GST Entries - Payment apply to Posted Purchase Invoice

Dear Experts,

I would like to seek your guidance regarding GST accounting behavior for Reverse Charge Mechanism (RCM) transactions in Microsoft Dynamics 365 Business Central.

When I post a Purchase Invoice with an RCM GST Group, the system creates the following entries:

CGST Receivable (Interim) – Dr
SGST Receivable (Interim) – Dr
CGST Payable (Interim) – Cr
SGST Payable (Interim) – Cr

This is as expected.

However, at the time of Bank Payment (after applying the invoice), the system posts additional entries: and Interim Amount move in Actual GST Payable & Receivable Account

CGST Receivable (Interim) – Cr
SGST Receivable (Interim) – Cr
CGST Receivable – Dr
SGST Receivable – Dr
CGST Payable (Interim) – Dr
SGST Payable (Interim) – Dr
CGST Payable – Cr
SGST Payable – Cr

In contrast, for some other RCM transactions, the system does not pass these additional GST entries at the time of payment. It only posts Vendor (Dr) and Bank (Cr), which is the expected behavior in our requirement.

Due to this inconsistency, I would like to understand:

Why the system behaves differently for RCM transactions in similar scenarios
Which specific setup or configuration (GST Posting Setup, Vendor, or ITC settings) is responsible for this difference
How we can restrict or control these additional GST entries at the time of payment

Request your guidance to help identify the root cause and standardize the behavior across transactions.

Categories:

Dynamics 365 Business Central

Hello,
The behavior you’re seeing is standard and driven by the GST/ITC setup for RCM, not random: in Business Central, deferral-like interim postings are used for GST, and whether the system “moves” amounts from Interim to Final GST accounts at payment depends mainly on ITC eligibility and the RCM setup in GST Posting Setup / Vendor / GST Group—when ITC is enabled/allowed (or “Claim ITC” logic is triggered), BC posts the additional entries at payment to transfer amounts from Interim → Actual GST Receivable/Payable; when ITC is not enabled or treated as non-creditable, the system skips that transfer and only posts Vendor/Bank, which is why you see inconsistent behavior across transactions. So the root cause is usually differences in: (1) GST Posting Setup (Interim vs Final accounts + RCM flags), (2) ITC eligibility/claim settings on the transaction/vendor, and (3) GST Group configuration, not the document itself; to standardize behavior, you need to align these setups (especially ITC-related fields and whether GST should be settled/claimed on payment), otherwise BC will keep posting the interim-to-final adjustment automatically. (This is based on standard BC + India localization behavior; no MVP fallback used.)

Regards,
Oussama Sabbouh

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