There are some monetary disadvantages in dealing with unregistered dealers in Goods and services tax as it will be completely opposite for a beneficial deal for all those registered dealers. There is some persistent question regarding the anonymity of unregistered dealers in the GST. Some of the questions are framed here to acknowledge the general queries regarding the transaction with the unregistered dealer.
Q: What is RCM provision and according to this what are the consequences if the purchase is made from unregistered dealers?
A: RCM provisions stands for reverse charge mechanism which is utilized for the tax payment made by the recipient on the purchase of any good or service. RCM also explains that tax is paid by the opposite party and this is implied in the case of unregistered dealer also. The reverse charge already finds its place in service tax provision and has been included in the GST also making necessary for all the dealers to pay taxes based on reverse charge.
Q: In reverse charge mechanism, what will be the duration of supply in a matter of purchasing of goods?
A: The duration of supply in a matter of purchasing of goods in reverse charge mechanism will be earlier in the following:
The date of receipt of goods or
- Date on which payment is made or
- The date immediately following 30 days from the date of issue of invoice
Now take an example that if a taxpayer’s purchase some goods on 25 July and present the bill on 2nd august and for the same the consideration is paid on 28th august than the provision of RCM will deem 25 July as a time of the supply.
Q: What will be the case in services for the time of supply in RCM?
A: In this case, the following scenario will be applicable:
- The date on which payment is made
- The date immediately following 60 days from the date of issue of invoice
Q: What will be the case for GST paid in RCM whether the credit will be allowed or not?
A: As per the GST provisions, each taxpayer can take the input tax credit but in order to avail the credit of tax paid, first he has to pay the taxes to avail the credit on all those purchases in the next month. In the provisions it is clearly mentioned that GST credit cannot be availed on food and beverages, building, passenger vehicle even if the tax is paid on R.C.M basis that means the burden of such tax shall be borne by the taxpayer.
Recommended: GST Refund Procedure Under Goods and Services Tax India
Q: What changes can RCM bring after the implementation of GST?
A: The RCM can significantly increase the number of taxpayer base in India while it also mentioned that purchases made from an unregistered dealer can prove expensive for the registered dealer. This will be attracting reverse charges in case if any dealers make transactions with an unregistered dealer.
I am dealing in Natural rubber. Most of my purchase is from Unregistered dealer. Am i comes under RCM as rubber is not listed Cashew nuts, not Notification No.4/2017-Central Tax Rate.
In case of purchase from unregistered dealers, RCM applies.
2 to 3 bank details means for the purpose of rtgs transfer i wish to give choice of two different banks ifsc codes etc / or one is sufficent
Yes, it is available in Gen GST software.
What is the limit for cash sale to a single party on a single day under present act and details of purchaser to be mentioned in invoice during cash sale.
IN CLEAR TAX SOFTWARE, CAN WE CUSTOMIZE THE SALES INVOICE LIKE DISCOUNT IN % , BILLING FOR APPROX 10TO 12 ITEMS IN ONE BILL OF DIFFERENT GST RATES, ALONG WITH SOME RCM ,ALSO GOODS ITEMS WITH SERVICE ITEMS. AMOUNT WITH PAISE , ROUND OFF ETC
2 TO 3 BANK DETAILS, WILL I GET TECHNICAL SUPPORT FOR INSTALLATION AND TO CUSTOMIZE THE REQUIREMENTS IN SALES INVOICE, ETC
Yes, These features are available in SAG GST software but please clarify “2 TO 3 BANK DETAILS”.
i have opted for deregistration since my t/o is below 10 lakhs. how do i do interstate purchases without gst no. my ca in Karnataka says its possible while my up wholesaler refuses to send
If a vendor who is not registered under GST, supplies goods to a person who is registered under GST, then Reverse Charge would apply. This means that the GST will have to be paid directly by the receiver to the Government instead of the supplier.
Points to keep in mind:
An unregistered dealer cannot make interstate supplies. This means that Reverse Charge in this case will apply only in case of intra-state supply by an unregistered dealer.
Only if the total supply from unregistered person exceeds Rs 5,000 in a day, then reverse charge will be applicable (Notification No.8/2017-Central Tax)