{"id":2074,"date":"2018-08-30T11:07:07","date_gmt":"2018-08-30T05:37:07","guid":{"rendered":"http:\/\/cacube.in\/?p=2074"},"modified":"2024-07-14T13:20:53","modified_gmt":"2024-07-14T07:50:53","slug":"all-about-reverse-charge-mechanism-of-goods-services-in-gst","status":"publish","type":"post","link":"https:\/\/cacube.in\/?p=2074","title":{"rendered":"All About Reverse Charge Mechanism of Goods & Services in GST."},"content":{"rendered":"

All about Reverse charge Mechanism In GST.<\/strong><\/h1>\n

What is Reverse Charge<\/span><\/h2>\n

Normally Supplier of goods or services is liable to pay tax to Government. Supplier collect tax amount from receiver along with value of goods or services and deposit it to the government. But in case of reverse charge, changeability gets reversed and Receiver of goods or services is liable to pay tax directly to Government.<\/p>\n

Normal Charge:-<\/span><\/p>\n

Supplier receives tax from buyer along with value of supply and deposit it to Government.<\/p>\n

Reverse Charge:-<\/span><\/p>\n

Supplier only receives value of supply from buyer and buyer is liable to deposit tax amount to Government directly.<\/p>\n

<\/h2>\n

Cases where Reverse Charge is Applicable.<\/span><\/h2>\n

A. Supply from an Unregistered dealer to a Registered dealer<\/strong><\/span><\/h3>\n

Section 9 (4) of the Central Goods and Services Tax, 2017<\/strong> (CGST Act in short) and Section 5(4) of Integrated Goods and Services Tax, 2017<\/strong> (IGST Act in short) provides that tax in respect of the supply of taxable goods or services or both by a person, who is not registered, to a registered person shall be paid by such person on reverse charge basis as the recipient and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both.<\/p>\n

But these provisions kept on hold through various notification issued time to time. Recently these provisions are postponed till 30.09.2018 vide notification dated 29.06.2018. TDS provisions of GST are also postponed till 30.09.2018.<\/p>\n

Download CGST notification<\/span><\/a><\/p>\n

Download IGST Notification<\/a><\/span><\/p>\n

Refer below given analysis of applicability of RCM in case of unregistered person:-<\/u><\/strong><\/p>\n

Applicability of IGST-RCM on Unregistered person u\/s 5(4):-<\/u><\/strong><\/p>\n

    \n
  1. 1st<\/sup> July, 2017 to 12th<\/sup> October, 2017:-<\/u><\/strong> IGST is payable on RCM basis on all interstate supply of goods or services or both, from very first rupee, received by a registered person from an unregistered person from outside state,<\/li>\n
  2. 13th<\/sup> October, 2017 upto 30th Sept. 2018:-<\/u><\/strong> No IGST is payable on RCM basis on all interstate supply of goods or services or both, received by a registered person from an unregistered person located outside the state.<\/li>\n
  3. IGST shall be payable on RCM basis from 1st<\/sup> Oct, 2018 on all interstate supply of goods or services or both, from very first rupee, received by a registered person from an unregistered person from outside state.<\/li>\n<\/ol>\n

    Applicability of CGST-RCM on Unregistered person u\/s 9(4):-<\/u><\/strong><\/p>\n

      \n
    1. 1st<\/sup> July, 2017 and upto 12st<\/sup> oct., 2018:- E<\/u><\/strong>xemption to all intra-state supply of goods or services or both was granted to the registered person who receives such supply from an unregistered person from payment of CGST on RCM basis subject to thresh hold limit of Rs. 5,000.00 per day in aggregate as provided by way of a proviso to notification 8\/2017.<\/li>\n
    2. 13th Oct, 2018 and upto 30th Sept, 2018<\/u><\/strong>:<\/strong>That the exemption from payment of GST on RCM basis for receipt of intra-state supply of goods or services or both by a registered person from an unregistered person is applicable without any threshold limit w.e.f. 1st<\/sup> July, 2017 and upto 31st<\/sup> March, 2018.(Thershold limit of Rs. 5000\/- omitted by notification 38\/2017 dated 13.10.2017.<\/li>\n
    3. If GST on RCM basis has not be paid by a registered person in compliance of Notification 8\/2017 supra, there is no need to deposit the same now.<\/li>\n
    4. Registered dealer can claim refund of GST paid on RCM basis upto 12th<\/sup> October, 2017 where the GST paid on RCM was not eligible for ITC<\/li>\n
    5. That CGST and SGST shall be payable on RCM basis from 1st<\/sup> Oct., 2018 on all intra-state supplies of goods or services or both,received by a registered person from an unregistered person.<\/li>\n<\/ol>\n

      B. Services through an e-commerce operator<\/strong><\/span><\/h3>\n

      If an e-commerce operator supplies services then reverse charge will be applicable to the e-commerce operator. He will be liable to pay GST.<\/p>\n

      For example, UrbanClap provides services of plumbers, electricians, teachers, beauticians etc. UrbanClap is liable to pay GST and collect it from the customers instead of the registered service providers.<\/p>\n

      If the e-commerce operator does not have a physical presence in the taxable territory, then a person representing such electronic commerce operator for any purpose will be liable to pay tax. If there is no representative, the operator will appoint a representative who will be held liable to pay GST.<\/p>\n

      C. Supply of certain goods and services specified by CBEC<\/strong><\/span><\/span><\/h3>\n

      CBEC has issued a list of goods and a list of services under section 9(3) of CGST Act, on which reverse charge is applicable.<\/p>\n

      Click Here for list of services under Reverse Charge. (Click here to download)<\/span><\/a><\/span>
      \n<\/span><\/h4>\n

      List of the Services Notified for Reverse Charge under section 9(3) of CGST Act <\/strong><\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
      S No<\/td>\nDescription of supply of Service<\/strong><\/td>\nSupplier of service<\/strong><\/td>\nRecipient of service<\/strong><\/td>\n<\/tr>\n
      1<\/td>\nAny service supplied by any person who is located in a non-taxable territory to any person other than nontaxable online  recipient.<\/td>\nAny person located in a non-taxable territory<\/td>\nAny person located in the taxable territory other than nontaxable online recipient.<\/td>\n<\/tr>\n
      2<\/td>\nGTA Services<\/td>\nGoods Transport Agency (GTA) who has not paid integrated tax at the rate of 12%<\/td>\nAny factory, society, cooperative society, registered person, body corporate, partnership firm, casual taxable person; located in the taxable territory<\/td>\n<\/tr>\n
      3<\/td>\nLegal Services by advocate<\/td>\nAn individual advocate including a senior advocate or firm of advocates<\/td>\nAny business entity located in the taxable territory<\/td>\n<\/tr>\n
      4<\/td>\nServices supplied by an arbitral tribunal to a business entity<\/td>\nAn arbitral Tribunal<\/td>\nAny business entity located in the taxable territory<\/td>\n<\/tr>\n
      5<\/td>\nServices provided by way of sponsorship to any body corporate or partnership firm<\/td>\nAny person<\/td>\nAny body corporate or partnership firm located in the taxable territory<\/td>\n<\/tr>\n
      6<\/td>\nServices supplied by the Central Government, State Government, Union territory or local authority to a business entity excluding, \u2013 (1) renting of immovable property, and (2) services specified below- (i)services by the Department of Posts by way of speed post, express parcel post, life insurance, and agency services provided to a person other than Central Government, State Government or Union territory or local authority;(ii) services in relation to an aircraft or a vessel, inside or outside the precincts of a port oran airport (iii) transport of goods or passengers.<\/td>\nCentral Government, State Government, Union territory or local authority<\/td>\nAny business entity located in the taxable territory<\/td>\n<\/tr>\n
      6A<\/td>\nServices supplied by the Central Government, State Government, Union territory or local authority by way of renting of immovable property to a person registered under the Central Goods and Services Tax Act, 2017 (12 of 2017).** Added with effect from 25.01.2018<\/td>\nCentral Government, State Government, Union territory or
      \nlocal authority<\/td>\n      		Any person registered under the
      \nCentral Goods and Services<\/strong>
      \n Tax Act, 2017<\/strong> read with clause (v) of section 20 of
      \nIntegrated Goods and Services Tax Act, 2017<\/strong>.<\/td>\n<\/tr>\n
      7<\/td>\nServices supplied by a director of a company or a body corporate to the said company or the body corporate<\/td>\nA director of a company or a body corporate<\/td>\nThe company or a body corporate located in the taxable territory<\/td>\n<\/tr>\n
      8<\/td>\nServices supplied by an insurance agent to any person carrying on insurance business<\/td>\nAn insurance Agent<\/td>\nAny person carrying on insurance business, located in the taxable territory<\/td>\n<\/tr>\n
      9<\/td>\nServices supplied by a recovery agent to a banking company or a financial institution or a non banking financial company<\/td>\nA recovery Agent<\/td>\nA banking company or a financial institution or a non banking financial  company, located in the taxable territory<\/td>\n<\/tr>\n
      10<\/td>\nServices supplied by a person located in non- taxable territory by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India<\/td>\nA person located in non-taxable territory<\/td>\nImporter, as defined in clause (26) of section 2 of the Customs Act, 1962 (52 of 1962), located in the taxable territory<\/td>\n<\/tr>\n
      11<\/td>\nSupply of services by an author, music composer, photographer, artist or the like by way of transfer or permitting the use or enjoyment of a copyright covered under section 13(1) (a) of the Copyright Act, 1957 relating to original literary, dramatic, musical or artistic works to a publisher, music company, producer or the like<\/td>\nAuthor or music composer, photograph her, artist, or the like<\/td>\nPublisher, music company, producer or the like, located in the taxable territory<\/td>\n<\/tr>\n
      12<\/td>\nSupply of services by the members of Overseeing Committee to Reserve Bank of India<\/td>\nMembers of Overseeing Committee constituted by the Reserve Bank of India<\/td>\nReserve Bank of India.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

       <\/p>\n

      List of Goods under reverse charge.<\/span><\/h4>\n

      List of the notified goods under section 9(3) of CGST Act on which Reverse Charge Mechanism is applicable:-<\/strong><\/p>\n\n\n\n\n\n\n\n\n\n\n
      S No<\/strong><\/td>\nParticulars of supply of Goods<\/strong><\/td>\nSupplier of Goods<\/strong><\/td>\nRecipient of Goods<\/strong><\/td>\n<\/tr>\n
      1<\/td>\nCashew nuts, not shelled or peeled<\/td>\nAgriculturist<\/td>\nAny registered person<\/td>\n<\/tr>\n
      2<\/td>\nBidi wrapper leaves (tendu)<\/td>\nAgriculturist<\/td>\nAny registered person<\/td>\n<\/tr>\n
      3<\/td>\nTobacco leaves<\/td>\nAgriculturist<\/td>\nAny registered person<\/td>\n<\/tr>\n
      4<\/td>\nSilk yarn<\/td>\nAny person who manufactures silk yarn from raw silk or silk worm cocoons for supply of silk yarn<\/td>\nAny registered person<\/td>\n<\/tr>\n
      5<\/td>\nRaw cotton<\/td>\nAgriculturist<\/td>\nAny registered person.<\/td>\n<\/tr>\n
      6<\/td>\nSupply of lottery<\/td>\nState Government, Union Territory or any local authority<\/td>\nLottery distributor or selling agent<\/td>\n<\/tr>\n
      7<\/td>\nUsed vehicles, seized and confiscated goods, old and used goods, waste and scrap<\/td>\nCentral Government, State Government, Union territory or a local authority<\/td>\nAny registered person<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

      Time of Supply in Case of Reverse Charge.<\/span><\/span><\/h2>\n

      A. Time Of Supply in case of Goods<\/strong><\/span><\/h3>\n

      In case of reverse charge, the time of supply shall be the earliest<\/strong> of the following dates:<\/p>\n