In a meeting held of the finance ministers of various Indian states for reviewing of the GST reverse charge mechanism, it has been recommended that section 9(4) of the CGST Act, 2017 should be deleted.
According to Section 9(4) of the CGST Act, 2017, “The central tax in respect of the supply of taxable goods or services or both by a supplier, 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.”
As per the current reverse charge mechanism rule mentioned in section 9(4), registered dealers who buy goods/services from unregistered dealers will have to pay tax on such supplies. The government, on June 29, released a notice postponing the reverse charge mechanism again till September 30.
Bihar Finance Minister Sushil Modi confirmed the news saying that the GST Council will take the final decision on this matter in its next 28th meeting.
The GST Council, in a bid to promote digital payments, had earlier made a proposal to offer a two percent tax discount on purchases which are made through digital payment modes, such as BHIM UPI and other online transactions. Under the proposal, one percent discount would be given on the CGST and the state GST, each. That means a consumer will have to pay 2% less tax when paying online for a particular good or service. However, not everyone seems to be happy with the proposal. A group of ministers has suggested that the Council should defer the incentive proposal for a year.
The discount offer is proposed to be given only on items which are currently taxed at 3% or more and the maximum discount that can be availed would be Rs 100 per transaction. This incentive scheme is expected to create a burden of Rs 13,000 to Rs 26,000 crore to the exchequer.
Read Also: Upcoming Recommendations for Goods and Services Tax in FY 2018-19
The GST panel of states’ finance ministers includes Rajesh Agarwal of Uttar Pradesh, Manpreet Singh Badal of Punjab, Thomas Isaac of Kerala, and Amar Agrawal of Chhattisgarh, and is headed by Sushil Modi of Bihar.
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The RCM does not seem to add any amount into the Govt. kitty except increasing the workload for the dealers and additional burden on the GST site. It should be abolished too.