What is the Reverse Charge Mechanism(RCM) under GST?
The Reverse Charge Mechanism (RCM) is the process of GST Payment by the receiver instead of the supplier. In this case, the liability of tax payment is transferred to the recipient/receiver instead of the supplier.
Latest Update
- 54th GST Council Meeting – “To bring the renting of commercial property by an unregistered person to a registered person under the Reverse Charge Mechanism (RCM) to prevent revenue leakage.”
- GST Portal has introduced a new statement for reporting Reverse Charge Mechanism (RCM) transactions called RCM Liability/ITC Statement. View more
- 53rd GST Council Meeting Update: To simplify claiming ITC, the Council recommends clarifying that purchases under the RCM from unregistered suppliers follow a specific rule. When the recipient issues the invoice for such a purchase, the relevant financial year for calculating the ITC time limit under section 16(4) of the CGST Act will be the year the invoice is issued.
The Reverse Charge Mechanism is applicable in the case of :
- Imports
- Purchase from an unregistered dealer
- Supply of notified goods and services
This reverses the scenario as the person who is receiving the goods and services needs to pay the taxes. If the receiver is purchasing goods from unregistered providers, there needs to be a GST paid on their behalf. A payment voucher needs to be issued from the supplier to the recipient. The recipient must be a registered person as per Section 2(94) of the CGST Act,2017.
As per section 2(98) of CGST Act 2017, “Reverse-Charge” means the liability to pay tax by the recipient of the supply of goods or services or both instead of the supplier of such goods or services or both
- Under sub-section (3) or sub-section (4) of section 9, or
- Under sub-section (3) or subsection (4) of section 5 of the Integrated Goods and Services Tax Act
Need GST Billing Software for RCM Dealers
Current Situation in Reverse Charge Mechanism (RCM)
In the present scenario, the reverse charge mechanism is applicable in service tax for services like Insurance Agent, Manpower Supply, Goods Transport Agencies, etc. Unlike Service Tax, there is no concept of partial reverse charge. The recipient has to pay 100% tax on the supply.
In the earlier government scenario, it was hard to collect service tax from the numerous unorganized sectors just similar to goods transportation. The effort has been made to place the services as per the existing regime and Compliances and tax collections will, therefore, be increased through the reverse charge mechanism. Currently, there is no reverse charge mechanism on the What is Mixed and Composite Supply Under GST? The reverse charge may be applicable for both goods and services.
RCM Provisions Under GSTR Forms – GSTR 1 – GSTR 2
This system is being carried forward from the VAT regime. In case the supplier is registered, but the goods or services come under the reverse charge mechanism, the input tax credit cannot be claimed by the supplier as the tax is not credited by him but the receiver is paying the taxes.
In the case of importers of goods, taxes need to be paid under the reverse charge mechanism to the Government on the import. This is in addition to the import duties.
The details of the charges pertaining to the inward supply of goods or services are to be mentioned in GSTR 1. The details of inward supply are stated in the form GSTR 2.
A person who is liable to pay tax under the reverse charge mechanism needs to be registered under GST irrespective of the turnover.
The goods/service supplier gets the input tax credit that is paid under the reverse charge. The only condition is that the input tax credit is used only for the furtherance of business.
The list of services to be included under the reverse charge mechanism are:
- Goods Transport Agency
- Recovery Agent
- Director of a company or body corporate
- An individual advocate or firm of advocates.
- An insurance agent
The Scenario Where Reverse Charge Will Be Applicable under GST
Supply by Unregistered Dealer
In case an unregistered person is selling goods or providing any services to the registered person, then the liability to pay tax shifts on the registered person i.e. the recipient of goods/services, where such supply is of taxable supplies. No reverse charge mechanism in the case of exempted supplies.
The tax will be paid by the registered dealer and all the provisions of the act will be applicable to him as if he is the supplier of the goods or services The concept behind this is to prevent tax evasion since it would be almost impossible to collect tax from the unregistered dealer. It would increase tax compliance and promote transparency. Input credit will be allowed to the registered dealer for the tax paid by him under the reverse charge mechanism.
Recommended: What is Mixed and Composite Supply Under GST?
This extra compliance under the Act will force all the registered persons to purchase goods only from the registered dealers and this is what the new regime aims at.
Under RCM, Who is Responsible for Paying GST?
RCM requires that the recipient pay GST on goods/services. Nonetheless, in order to comply with GST law, the supplier of goods is required to indicate whether RCM tax is due on the invoice.
RCM GST payments should be made keeping the following points in mind:
- ITC on RCM tax amounts can only be claimed by recipients of goods or services if they are used to conduct business or further that business.
- If a composition dealer discharges liability under RCM, he should pay tax at the normal rates, not the composition rates. Additionally, they are not eligible to claim GST credit.
- RCM tax payables or charges can be subject to GST compensation cess.
For Services Provided by E-commerce Operator
In the case of services provided by e-commerce operators, the liability to pay tax lies on the recipient of services. If the assessee has no physical presence in the taxable area, then the representative of such an e-commerce operator will be liable to pay tax. If there is no representative, then the assessee has to appoint one who will be liable to pay GST.
For Services
CBEC has notified a list of services on which the reverse charge mechanism will be applicable under the GST
| S. No. | Provider | Recipient |
|---|---|---|
| 1 | Goods transport agency | Casual Taxable person, body corporate, partnership firm, any society, factory, any person registered under CGST, SGST, IGST Act |
| 2 | Recovery Agent | Banking Company, NBFC or any financial institution |
| 3 | A director of a company or a body corporate | A company or a body corporate |
| 4 | An individual advocate or firm of advocates, An arbitral tribunal | Any business entity |
| 5 | An insurance agent | Any person carrying on insurance business |
| More: Illustrative list on which the reverse charge mechanism is applicable for services |
Supply of Goods Under RCM
| S.No | Description of Supply of goods | Supplier of Goods | Recipient of Goods |
|---|---|---|---|
| 1. | Cashew nuts, not shelled or peeled | Agriculturist | Any registered person |
| 2. | Silk yarn | Any person who manufactures silk yarn from raw silk or silk worm cocoons for supply of silk yarn | Any registered person |
| 3. | Raw cotton | Agriculturist | Any registered person |
| 4. | Used vehicles, seized and confiscated goods, old and used goods, waste and scrap | Central Government, State Government, Union territory or a local authority | Any registered person |
Supply of Services Under RCM
| S. No | Description of Supply of Service | Supplier of Goods | Recipient of Service |
|---|---|---|---|
| 1. | Any service supplied by any person who is located in a non-taxable territory to any person other than non-taxable online recipient | Any person located in a non-taxable territory | Any person located in the taxable territory other than non-taxable online recipient. |
| 2. | GTA Services | Goods Transport Agency (GTA) who has not paid integrated tax at the rate of 12% | Any factory, society, cooperative society, registered person, body corporate, partnership firm, casual taxable person; located in the taxable territory |
| 3. | Legal Services by advocate | An individual advocate including a senior advocate or firm of advocates | Any business entity located in the taxable territory |
| 4. | Services supplied by an arbitral tribunal to a business entity | An arbitral tribunal | Any business entity located in the taxable territory |
| 5. | Services provided by way of sponsorship to any body corporate or partnership firm | Any person | Any body corporate or partnership firm located in the taxable territory |
| 6. | Services supplied by the Central Government, State Government, Union territory or local authority to a business entity excluding, – (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 or an airport; (iii) transport of goods or passengers. | Central Government, State Government, Union territory or local authority | Any business entity located in the taxable territory |
| 7. | Services supplied by a director of a company or a body corporate to the said company or the body corporate | A director of a company or a body corporate | The company or a body corporate located in the taxable territory |
| 8. | Services supplied by an insurance agent to any person carrying on insurance business | An insurance agent | Any person carrying on insurance business, located in the taxable territory |
| 9. | A banking company or a financial institution or a nonbanking financial the company, located in the taxable territory | A recovery agent | Services supplied by a a person located in nontaxable territory by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India |
| 10. | Supply 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 | A person located in non-taxable territory | Importer, as defined in clause (26) of section 2 of the Customs Act, 1962(52 of 1962), located in the taxable territory |
| 11. | Supply 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 the original literary, dramatic, musical or artistic works to a publisher, music company, producer or the like | Author or music composer, photograph her, artist, or the like | Publisher, music company, producer or the like, located in the taxable territory |
| 12. | Supply of services by the members of Overseeing Committee to Reserve Bank of India | Members of Overseeing Committee constituted by the Reserve Bank of India | Reserve Bank of India. |
Points to be noted:
No partial reverse charge will be applicable under GST. 100% tax will be paid by the recipient if the reverse charge mechanism applies.
- In the case of B2B import of other services, the tax shall be payable by the recipient of services
- In the case of B2B import of goods, the tax shall be payable by the recipient of goods
Liability of Registration Under RCM (Reverse Charge Mechanism)
Under Reverse Charge Mechanism who is liable to register in the new tax regime?
- A person who pays taxes under reverse charge is required to register under GST irrespective of the threshold and the annual threshold Limit is 20 lakhs (10 lakhs in the case of Hill states and North Eastern State)
Note: In the GST council meeting, states were given the liberty to impose a double threshold limit for registration i.e. 40 lakh up from the earlier INR 20 lakh.
Time of Supply
Under GST, time of supply means a particular point in time when the goods or services are rendered or supplied. It allows us to find out the tax rate, value and due dates for filing returns. Under the Reverse Charge Mechanism, the receiver is entitled to pay GST. However, the time of supply for supplying goods and services under reverse charge varies from the supplies which are under forwarding charge.
How do Find Out the Time of Supply under the Reverse Charge Mechanism (RCM)?
In the case of Goods: Time of supply in case of supplying goods when tax payable under Reverse Charge, whichever is earliest from the following dates:-
- the date of the receipt of goods;
- the date of payment as entered in the books of account of the recipient;
- the date on which the payment is debited in his bank account, whichever is earlier;
- the date immediately following thirty days from the date of issue of invoice or any other document, by whatever name called, in lieu thereof by the supplier
Note: However, if it is not possible to find out the time of supply in the above-mentioned cases than the time of supply will be considered the date of entry in the books of account of the recipient of the supply.
Let us understand by an example given below:-
- Date of Payment – 18th June 2023
- Date of Invoice – 1st July 2023
- Date of Entry in books by the recipient – 19th June 2023
In this case, the time of supply will be 18th June 2023
If the supplier is located outside India, then the time of supply shall be the earliest of: ‘When the amount is paid i.e. the date of payment’
OR
‘When the recipient records the payment in his books of account’.
In the case of services: Time of supply in case of supplying services when taxes are payable under reverse charge mechanism, whichever is earliest from the following dates:-
- The date of payment; or
- The date immediately following after sixty days from the date of issue of the invoice by the supplier; whichever is earlier
However, if it is not possible to find out the time of supply in the aforementioned cases, the time of supply will be considered the date of entry in the books of account of the recipient of the supply.
Let us understand by an example given below:-
- Date of Payment – 18th August 2023
- Date of Invoice – 1st September 2023
- Date of Entry in books by the recipient – 19th August 2023
Note: In this case, the time of supply will be 18th August 2017, Due to some reasons if the time of supply can’t be ascertained under 1 or 2 heads, in this case, it will be 19th August i.e., the date of entry in books by the recipient.
There are two types of reverse charge scenarios mentioned in the law. The first one is dependent on the nature of the supply and the nature of the supplier. This is covered under section 9 (3) of the CGST/ SGST (UTGST) Act and section 5 (3) of the IGST Act. The second one taxable supply made by the unregistered person to a registered person covered under section 9 (4) of the CGST/SGST (UTGST) Act and section 5 (4) of the IGST Act.
The Manner of Payment of GST under the Reverse Charge Mechanism
As per section 49(4) of CGST Act’2017, ITC can be used for payment of output tax only. Therefore tax under reverse charge can be paid through cash only without availing the benefit of ITC. The supplier must mention in his tax invoice whether the tax is payable on reverse charge.
Input Tax Credit:
The service recipient can avail of Input Tax credit on the Tax amount that is paid under reverse charge on goods and services. The only condition is that the goods and services are used or will be used for business or furtherance of business.
If the composite dealer falls under the reverse charge mechanism then the dealer is ineligible to claim any credit of tax paid. The tax will be paid at the normal applicable rates and not at the composition rates.
Registration Requirement under Reverse Charge Mechanism (RCM):
As per Section 24 of CGST Act 2017, A person paying tax under the reverse charge mechanism has to compulsorily get registered even if the turnover is below the threshold limit.
Applicability of GST Compensation Cess:
GST Compensation Cess will be applicable on tax paid under the reverse charge mechanism also. The purpose is to compensate States for loss of revenue on the implementation of GST. This will be applicable for 5 years from the date GST gets implemented.
Important Points to be Taken Care Under RCM :
- Goods and services notified under section 9(3) or section 9(4) must have a person registered under GST.
- Under the reverse charge mechanism, the GST applicable must be submitted to the government on every 20th of next month
- The input tax credit will be available for all the RCM goods and services used for the furtherance of business according to the GST paid. And the service-acquiring individual, who is also paying the reverse charge can take the benefits of an input tax credit.
- There will be no auto-population of details of the GST paid under the RCM in GSTR 2, but it will be subjected to the manual furnishing of details.
- Wherever the RCM is applicable the invoice must be arranged by the recipient on itself while the invoices along with the consolidated purchases should be issued on a daily basis. on all the GST applicable who are under section 31(3).
- A payment voucher must be issued by the recipient during the period of supplier payment.
- The ITC is not available for the reverse charge payment to the authority.
- The composition scheme registered individuals also come under the reverse charge, well there will be no credit of RCM availed.
- The reverse charge mechanism applies to payments made in advance also.
Note: If in case, a dealer is unregistered under GST, then he is not allowed to deal in any interstate transactions. For any reverse charge mechanism to be applicable, there must be only intra-state transactions.
Conclusion: With the biggest tax reform ready to be implemented, the Reverse charge mechanism is not a new concept as we are already dealing with this in the service tax. But imposing a 100% reverse charge is definitely a big change. There are both pros and cons of this reverse charge mechanism but then no accurate conclusion can be drawn currently as to how society will be impacted by its imposition. On one hand, it will definitely be burdensome for the small supply receivers, but on the other hand, it will increase tax compliance for the country as a whole and would increase transparency.
1)We are under composition scheme,is GSTR3B required to be filed by composite dealer before 20th Aug’17?
2)Secondly, can you share INVOICE format for raising invoice for goods purchased under RCM
3) Goods purchased from unregistered dealer for Rs 3000/- with no RCM invoice raised, now will Bill of Supply required while selling this goods?
iF i AM MAKING PAYMENT BELOW 5000 PER DAY TO GOODS TRANSPORT AGENCY WILL I HAVE TO PAY REVERSE CHARGE AND WHETHER UNDER IGST OR CGST & SGST
RCM provisions will be applicable since limit of Rs. 5000 in a day is for the sales made or services availed from unregistered dealers/service providers.
i want to rectify mistakes in migration to gst. i got the gstin registration no. but i how to edit my sumission.
Minor Correction & Amendment in submitted form is only allowed under Registrations Section of GST Website after your login.
Do i need to raise bill on reverse charge basis for transport services availed for supply of goods to my customers,
(i)if i buy 3000/- worth goods and 3000/- transport bill on a single day from u/r dealers. do i need to pay tax on rs 1000 or do i need to pay tax on entire 6000/- can i claim RCM on said payment (transport and purchase of goods).
For services provided by goods transport agency, reverse charge is applicable. Tax @5% is applicable with no ITC. Limit of Rs. 5000 is only applicable in case of purchase from unregistered dealer. In your case If transportation cost is part and parcel of supply then GST has to be charged at the same rate of tax charged on supply on total Rs. 6000.Further it should be noticed that if you are not charging freight cost in invoice and is directly paid by buyer or recipient of supply, then he has to comply with GTA provisions including RCM.
Dear Sir,
Only notified goods and services such as GTA, Advocate, etc are supposed to be charged GST under reverse charge mechanism. Is it necessary to pay tax on services other than mentioned in the list such as conveyance, staff welfare, etc ?
if goods/services availed from unregistered persons exceed Rs. 5000 per day, then reverse charge is applicable on such goods/ services.
Dear Sir
Is Reverse charge applicable for Jobwork . Suppose I get work done from a Jobworker who is unregistered. Job work he does is manufacturing. Do I need to pay tax under RCM
Niraj
Yes if you get job-work done from unregistered dealer then you are liable to pay GST under RCM.
I have registered with GST and a Manpower Recruiter, with turnover of around 12 lacs per annum. Have I to charge GST to my customers now, since my last 3 years turnover has not crossed 12 lacs.
Yes you have to charge GST to your customer as you are registered under GST.
I am a registered dealer in Punjab. I bring goods from Delhi through GTA and pay cartage of Rs 3500/- in a day. Is rcm applicable on me .
yes, RCM is applicable in your case since limit of Rs. 5000 per day is applicable only on goods/services taken or accepted from unregistered dealers.
But what if GTA is also unregistered. Since he provides only GTA service, he need not be registered, so he has not taken GSt registration. Still, RCM is applicable in this case?
Then limit of Rs.5000 per day becomes applicable i.e. Supplies received from unregistered persons.
Wheather to charge RCM on services less than Rs. 5000/- in a day from a Registered Dealer to Registered Dealer
Like Bill recd. from GTA for his services
RCM is only applicable on goods/services provided to registered dealer by unregistered dealer. On goods/services provided by registered dealer to another registered dealer, normal provisions apply.
sir there is RCM on rental exp of office & professional charges paid to advocate but kindly clarify do we can avail input on it–we are dealing in manufacture business
You can claim input of the tax paid under reverse charge mechanism.
Yes, input will be available for tax paid under RCM.
sir we are paying rent of office 30K & rcm is applicable do we can avail input on it in same way paying 45k to advocate p.m & rcm is applicable here too do we avail input on it
sir ur co is in manufacture business
sir, i am a dealer of supply the apple box from Delhi to Shimla. My office situated at Parwanoo. From Delhi invoice to be declared to my firm name but the freight to be paid by the costumer of Shimla. from Delhi freight bilty is to be done to my firm name but i am not paid freight. In this case who will pay the reverse charge on freight
Dear Sir
Is Reverse charge applicable for Jobwork . Suppose I get work done from a Jobworker who is unregistered . Job work he does is manufacturing. Do I need to pay tax under RCM
Yes. RCM is applicable on job work service also.
We are paying commercial rent of Rs.14,000/- per month, we are a partnership firm. The owner of the property does not fall under GST since his income does not cross the limit of Rs.20 Lac. In this scenario do we have to pay GST as reverse charge on the rent amount being paid? kindly advice
Yes, RCM provisions will be applicable in your case since the landlord is not registered under GST if the service is intrastate service. Since for interstate service, registration is mandatory.
Thank you so much for your prompt response. Does the RC invoice follow the same serial number of regular sales invoice or does it have separate numbering?
Dear Chanchal madam,
I am A CA & practising my turnover is less then 20 Lakhs But iam Registered for GST. Am i Liable to Collect GST & Pay to Government or will i under RCM?
Regards
Kaushik Shahukar
No, RCM will not be applicable in your case. since you are registered under GST , therefore liability to collect and pay tax arises. Once a person opts for registration, then all the provisions as applicable on the person who is mandatorily required to get registered relating to tax payment and return applies on the person who voluntarily opts for registration.
Thx madam,
Is the rule different for person taking fresh gst registration and person who has migrated.if the person was covered under service tax tule has shifted to gst under migration whether he can claim rcm method for gst if his turnover does not exceed 20 lacs.
I am working in a trading company in an accounts department, I have query on Transportation or Freight Charges. If we get transport services from Non GTA transporter i.e. from local or roadside tempo who is not issuing Bill, L.R., Consignment Note etc. then GST is applicable under reverse charge. Or it is exempted service from GST. Please reply
If you are paying Rs 5000 per day to the transporter then no RCM applicable, But make sure in that day you do not entered above 5000. – From Kunal Mob. 9979546978
CHANCALJI, DON’T WRITE DESCRIPTIVE ENGLISH, GIVE YOUR SUGGESTION IN SHORT AND POINT TO POINT WAY
Provisions have been quoted as per the act and if you need any clarification regarding any clause then you can ask your query .
under proprietor firm (cab-a-services), services receiver liable to pay GST or services provider pay GST under which clues of GST please kindly reply
In case of service of rent a cab services, reverse charge mechanism applies. i.e. the service receiver is liable to pay tax.
In case of transportation of goods by road services other than by GTA is exempt. “Goods transport agency” means any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called. जो माल pickup या ट्रैक्टर्स पर बिना बिल्टी के भेजा जाता है क्या वो GTA की सर्विसेज माना जायेगा या वो exempt सर्विसेज मानी जायेगी
Reverse charge is applicable in case of GTA service i.e. recipient is liable to 100% GST.
. जो माल pickup या ट्रैक्टर्स पर बिना बिल्टी के भेजा जाता है क्या वो GTA की सर्विसेज माना जायेगा या वो exempt सर्विसेज मानी जायेगी
the manufacturer delivers the goods to dealer on FOR and GST IS PAID BY MANUFATURER wheather manufacturer can claim full GST paid on trasportation
GST on RCM is charged for Government services like issue of permits/licences etc. (code 999111). The party availing service will have to remit GST @18% of the payment made. What is the responsibilities of the service provider (in this case Government Department). On what amount GST will be remitted by the party who obtained service. What is the mechanism for cross checking the transaction as there is no invoice made by the service provider?
GST is chargeable on the transaction value which is the actual amount paid or payable for the goods and services
can GST amount paid under reverse charge on 20th August ( liability of July) be adjusted against the reverse charge liability of August month which is payable before 20th Sept ?
Yes, adjustment can be made.
I have query regarding issuing of invoice in case of RCM , in case of i pay GST in RCM then i have raise Self invoice for each unregistered person payment or one for day or any time frame
Please suggest
how to enter purchases from unregistered dealers in GST portal?
You have to fill detail in GSTR 2 form under heading (From Registered Taxable Persons including supplies received from unregistered person in case of reverse charge).
Hi RCM if Rs 5000/- per day exceeds, is it compulsory to pay RCM under GST of every purchase & service ?
Yes it is compulsory to pay under RCM if purchased from unregistered dealer exceeding Rs 5000 per day.
I am registered in regular scheme under gst. what will happen if i purchased d goods from a manufacturer registered under composite scheme??plz reply
yes you can purchase goods from the composition dealer but no ITC will be allowed on the goods purchased under composition scheme.
A is a registered proprietary concern, he purchases kirana items from a kiranawala who is unregistered, worth of Rs.10,000/- on a single day for consumption at their home, he purchased on the registered name. Does A is required to pay RCM. Section 9(4) of CGST is not clear on this issue, i goods used for furtherance of business, please through some light on this
If purchase from unregistered dealer exceeds Rs. 5000/day then registered purchaser is liable to take pay tax under RCM.
hi
I am a registered dealer and received services from transporter.
I made payment to transporter under RCM.
Can I avail input for GST?
Yes
Hi
I have a question regarding reverse charge under GST.
Consider a scenario, An advocate is providing services to doctor who(Doctor) is not liable to get registered under GST as he is providing exempt services. Services provided by an advocate is taxable under GST under Reverse charge.
Is doctor liable to get registered under GST under reverse charge?
Kindly suggest me the best possible answer.
As per GST, services provided by an advocate or a firm of advocates by way of legal services to any business entity is covered under reverse charge.Since doctor is not a business entity therefore reverse charge provisions are not applicable. if the services are provided to any hospital then reverse charge applies.
We are a manufacturer and engaged GTA for supply of goods. We are a liable to pay GST under RCM. Is it available for taken ITC against the GTA and what percentage of TAX we will pay and SAC code?
Are there any sample invoice for RCM? as what needs to be written? As an example if “Krishna Goods Transport” from U.P. a GTA gives “Global Paper” in Haryana a transport service. The “Krishna Goods Transport” provides a builty of Rs. 25,000 in name of “Global Paper” What will be the format of the self invoice under RCM?
The difference between a normal tax invoice and tax invoice under RCM is that the invoice must mention that the tax under reverse charge is payable.
We are providing Hospital Service & Pharmacy sales. Hospital Service is GST exempted and no output tax collected. If we get supplies from unregistered dealer for Hospital Services, understand we have to pay GST on such purchases u/RCM. Can we take ITC on it, as the purchases are for furtherance of business (ie Hospital Services) though it is exempted. Since we are registered dealers, we FEEL we can take ITC on GST paid u/RCM, as the services are for furtherance of business.
Sir,
if you are registered under GST regime that means some of your products/service comes under the GST tax regime. Therefore, you can 100% take ITC of GTA , which is 5% under RCM. GTA is exempted under GST. If the supplier is an unregistered dealer then according to rates of the product/service being supplied you have to create a Self-Invoice with the respective rate and HSN/SAC code. Under this scenario as well as long as you are a registered person under GST regime you can clearly take 100% ITC on the goods/service being supplied to you by an unregistered dealer.
You cant take input credit as your supply is exempt. why did you register in the first place, if you’r exempt under Section 23.
AS GST RULES ADVOCATE DID NOT HAVE GST . BUT HOW CAN I ENTRY IN MY ACCOUNT BOOK. IS THAT RCM AND IF ENTRY RCM HOW CAN I DO
Services provided or agreed to be provided by an individual advocate or firm of advocates by way of legal services, directly or indirectly to any business entity is covered under RCM provisions i.e tax shall be payable by the recipient of the services.
Dear Sir,
If the advocate providing service is “A” state and service recipient is in “B” state then how the reverse charges will apply.
Services provided or agreed to be provided by an individual advocate or firm of advocates by way of legal services, directly or indirectly to any business entity is covered under reverse charge mechanism.
BUT WHAT IF ADVOCATE IS SUPPLYING SUCH SERVICES TO BE OF OTHER STATE. STILL A BE IS LIABLE TO PAY IGST (OR CGST AND SGST AS SELF INVOICE IS CREATED IN REVERSE CHARGE)
SO IGST WILL BE PAYABLE BY BE IN CASE OF INTERSTATE SUPPLY OF SERVICES
please rate of tax of GST Under RCM & its code in (IGST, SGST CGST) which applicable.
If a company registered under GST and hiring the services of their retired employees, whether it will attract RCM under GST.
If yes, what will be the treatment of this event?
My quarries is, I am GTO (Goods Transport Operator) I have 3 truck. I am dealing with factory companies firms etc I have GTO issued bill to factory companies on kaccha chittha or bills on tally to and fro specified in bills. I am not cross 20 lacs limit. But my client is force to me regarding taking registration of GST ? It will applicable reverse charge ? then why they are forcing me ? pls advice
Yes, reverse charge is applicable on GTA services by road and 100% GST is payable by Recipient. If you are providing interstate services then it is compulsory to take registration.If you are not providing interstate services then it is not compulsory to take registration if limit of Rs. 20 Lacs is not crossed.
THANK YOU SO MUCH SIR.
SIR, IF I HAVE TAKEN REGISTRATION THEN WHAT IS PROCESS OF PAYMENT OR RCM ?
not liable for registration under section 23 of cgst
thresh hold limit in GST for reverse mechanism Rs.5000/- per day is is correct please clarify and in tally point of sales (multiple customers) multiple products (in hotels) stock inventory/hsn codes are compulsory
INR 5000 per day is correct and HSN code is compulsory if turnover is more than 1.5 crore.
I have the following query :
I have a manpower supply agency and have supplied the manpower to educational institute and also to Government Department can i charged IGST and CSGT to Government department i.e. PWD, ESI Hospital etc.
I have already registered in GST Portal.
Under GST, certain government establishments will be required to deduct tax (TDS) from the amounts paid by them to the suppliers. The tax would be deducted @2% of the payment made to the supplier (the deductee) of taxable goods or services or both, where the total value of such supply, under a contract, exceeds two lakhs and fifty thousand rupees. Thus, individual supplies may be less than Rs. 2,50,000/-, but if contract value is more, TDS will have to be deducted.
Servcies provided to educational institute is exempt.
IGST can be collected only in case of Inter state supply.
Within state supply is liable for CGST and SGST at same rate for example furniture @ 28% where 14% is for CGST and 14% is for SGST.
I have a query as under ”
1) In gst regime whether input credit is available against GTA Inward for a registered contractor or a trader
2) In gst regime whether input credit is available against GTA Outward for a Manufacturer
Services provided or agreed to be provided by GTA, reverse charge mechanism applies with NO ITC.
on which basis u said that
No ITC on GTA services is for GTA service provider as he/she is not registered. The registered person can avail credit of Tax paid on GTA service by RCM.
Yes the credit will be available on both the instances, provided tax is paid by the person who bears the Freight Charge on RCM basis.
In gst regime 100% input credit is available against GTA Inward for a registered contractor or a trader
There is no input credit available in case of GTA services.
RCM paid under GTA Services is available as input credit for any other outward supply as it is not restricted under Sec 17. But input credit for providing GTA service is not available.
yes, agreed
I have a query relating to ISD of GST. in what way ISD will distribute supplies from unregistered person / RCM credit to its other unit / plant,
If the person liable to pay GST under Reverse charge, then he will not eligible to take registration as ISD, because he will be treated as normal service provider/ Goods Seller.
This is my opinion..
Thanks,
ISD registration can be taken by normal service provider/seller along with normal GST registration.
ISD inputs credit is for distributing credit of commonly availed service one unit to its other unit having same or different GST registration but same PAN No.
GST under reverse charge will be paid on or before filing GSTR-3 for previous month. For example, for July month it will be paid before 20th August and credit can be availed in the month of August.
So the credit availed in the month of Aug can be used for distribution through ISD mode in Aug itself or in sebsequent months.
WILL RCM GST PAID FOR JUL MONTH CREDIT CAN BE AVAILED FOR THE RETURN PERIOD OF JUL MONTH (WHICH IS BEING FILED IN AUG MONTH) OR FOR THE RETURN PERIOD OF AUG MONTH (WHICH WILL BE FILED IN SEP).
?
I have query where Tax paid under RCM is reflected in electronic ledger?
whether input can be taken in the same month in which it is paid?
Please contact department for assisstance
GST under reverse charge will be paid on or before filing GSTR-3 for previous month. For example, for July month it will be paid before 20th August and credit can be availed in the month of August.
What if a dealer chooses to pay July tax on 30th July ? Can he clain input credit of tax paid under RCM in July itself ?
Can this amount paid under reverse charge 20th be adjusted against the reverse charge liability of August month which is payable before 20th Sept ?
No, Input will be available after filing of return.
If we spent Rs. 25,000/ in the following manner during the day.
Rs. 2000/ Auto fare to different employees. (Exempted from GST)
Rs. 2500/ Hotel Stay to Employee for 3 days (Rs. 850 per Day Exempted from GST)
Rs. 8000/ to Supplier on account against supply of material who is registered and Bill is already booked in return.
Rs. 4000/ Hotel expenses on which, GST is already charged.
Rs. 4500/ Insurance Renewal Premium.
Rs. 4000/ Staff food Expenses.
Are we liable to pay GST on RCM, and on what amount?
Request to Inform and Guide.
Deepak Shah
Reimbursements of expenses to employees are excluded from the definition of supply if the employee act as a pure agent of the company.so no RCM liability for 8500 (2000+2500+4000) if these expenses are incurred by employees acting as a pure agent. On 8000, since purchases are from the registered dealer, no RCM liability arises. For hotel expenses, since services are availed from the registered dealer so
no RCM liability. If insurance renewal premium is paid to an unregistered person then also no rcm liability since the limit of Rs. 5000 per day is not exceeded. So no RCM liability arises in your case.