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How do I record a reverse charge purchase in Zoho Books, and can I offset it with ITC?

When you create the purchase transaction in Zoho Books, tick 'Is this transaction applicable for reverse charge?' and the reverse charge notation appears above the bill. You cannot offset a reverse charge liability with ITC: Zoho's help says it must be paid in the current filing period, and the amount paid can then be claimed as ITC in the following month.

Steps

Reverse charge applies when a registered business buys from an unregistered vendor, buys certain e-commerce services, or buys goods or services notified under the law. Zoho's article gives two steps.

  1. When creating the purchase transaction, select 'Is this transaction applicable for reverse charge?'.
  2. Save the bill. Zoho Books shows the reverse charge above the bill.
  3. Pay the reverse charge liability in cash in the filing period, not through ITC.
  4. Claim the tax paid as ITC in the following month's return.
How Charter AI does this

Charter AI's compliance calendar carries the GSTR-3B due date for each client and reminds you as it approaches, so the month in which reverse charge cash has to be paid is not missed.

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FAQs

Can I use ITC to pay reverse charge tax?

No. Zoho's help states the liability cannot be offset with ITC and must be paid in the current filing period.

When can the reverse charge tax be claimed as credit?

In the following month, after it has been paid, according to Zoho's help.

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Last reviewed 2026-10-15

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