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.
I have gone thru your write up on reverse charge but could not find info on rate of tax applicable on purchases from unregistered dealers. We purchase Textile Handicraft goods from small artisans who are not registered with GST (less than 20 lakh turnover) and from registered dealers. We consolidate and export same. The GST rate on Textile items is 5% upto Rs 1000 value/item and 12% on 1000+ value. Do we calculate reverse charges at these tax rates 5 & 12% as applicable. Some people are saying that there a notification under which reverse charge has to be calculated at 18% irrespective of category. It will be great help if you can clarify this.
Also there is some change in GST rates for Handicraft articles, please advise on same.
Read recent updates on handicraft here: https://blog.saginfotech.com/gst-impact-handicraft-industries
For Revised Slab Rates: https://blog.saginfotech.com/gst-slab-rates-india
Tax under reverse charge has to be paid at the rate applicable on that particular item and not @ 18%.
Sir
plz can you send the FAQ and your reply under GST RCM to my mail
regards
Raja shekara v s
Bangalore
Read the comments of RCM post.
When i filed July GSTR-3B on 28th August. I have enter RCM amount in 3.1 (d) but didn’t enter the same in 4(a)(3) for input credit as it has to be paid in cash is it correct or it should enter in 4(a)(3) even if i had to pay in cash? So now in august GSTR-3B return should i enter August RCM and July RCM in 4(a)(3) or Aug RCM in 4(a)(3) and July RCM in 4(a)(5).
Note- I have not paid RCM for august still.
1. It should be entered in 4(a)(3) if u need itc claim in same month even if u have to pay in cash
2. If u need to claim all the ITC regarding RCM for july and august month then enter total RCM amt( july+august) in 4(a)(3) cgst sgst
But for RCM for Aug is not paid i will pay while filing GSTR-3B. So if i enter in 4(a)(3) how will i pay in cash as it will offset Aug RCM liability or you mean to say if i enter amount in 4(a)(3) it will not offset rcm liability i have to pay in cash only? but i had claim it so will it come electronic ledger?
we are paying and at the same time taking the same amt as ITC.
u can offset liability by entering the RCM ITC in paid through itc column. Pay remaining in cash.
praise the Lord
example
Outward taxable and reverse charge inward
Output liability cgst 50000 sgst 50000
RCM cgst 12500 sgst 12500
Eligible ITC
RCM cgst 12500 sgst 12500
All other itc cgst 5000 sgst 5000
then your total ITC is 12500+5000=17500 for cgst and 17500 for sgst
total liability to pay is 50000+12500=62500 for cgst and 62500 for sgst
In payment of tax page u cannot make modification in reverse chare. so it is in column tax paid in cash.
make entries like this
paid through ITC paid in cash
tax payable cgst sgst
cgst 50000 17500 32500
sgst 50000 17500 32500
Reverse charge
cgst 12500 12500
sgst 12500 12500
so u have to create chellan for 45000 for cgst and 45000 for sgst and offset liability. simple but entry should be made like this to claim itc and offset. good luck!!! praise the Lord
Outward liability other than RCM paid through ITC paid in cash
tax payable cgst sgst
cgst 50000 17500 32500
sgst 50000 17500 32500
Reverse charge
cgst 12500 12500
sgst 12500 12500
My rcm amount is 8000 in July and 8000 in Aug. So from above example in Aug GSTR-3B return i will put July+Aug rcm rs.16000 in 4(a) (3) and in payment page as July rcm is already paid in cash in July GSTR-3B return i have to pay Aug rcm that is rs.8000 in cash and will take 16000 itc to offset other liabilities as I have not taken rcm input credit in July. Is it right?.
Yes, you are right, you have to pay tax for August RCM also and then you can take credit.
YES @MAHESH
First you have to deposit the tax under reverse charge mechanism then you can avail the input credit for tax under RCM.
@BENILA BENSAN I am confused now. @SAG INFOTECH bansan is saying we cannot do moderation in rcm in payment page so ultimately we r paying i cash which is shown in 3(d). and offsetting the same with other liabilities. So is it not correct way?
It is a correct way.
Use ur rcm itc 8000(july) +8000(aug) to offset ur other liability by entering it in paid through ITC column with cgst, sgst respectively. remaining amount to be entered in paid in cash column.
ok. And rcm liability of Aug through cash right? i.e 8000. Just now i call gst portal contact no. they saying Aug rcm itc cannot be set-off with other liabilities in this Aug gstr 3b return will get carry forward to next month. So what u say which one to follow.
July month rcm which was paid in cash in August, now should shown in part 4(a)(3) of Aug return to claim itc, for Aug rcm amount, if paid in cash in August itself can be claim in August return, otherwise pay first cash NOW, then claim in Sep month return . PLEASE CORRECT ME IF I AM WRONG
For ITC of tax paid under RCM, you first need to pay the amount and then adjust the same against the non RCM liability for the same month of return.
If you put Aug rcm on 20th of Sep in Aug gstr 3b in 3(D) and also in 4(a)(3) in payment page u have to pay Aug rcm in cash only there is no option to set-off with itc however you can use the same rcm amount to set-off other tax liabilities in the same Aug gstr 3b return. This is what i understand from the above example from bensan and i had done in my current return like that only.
As you have not claimed July rcm credit you can add both July and Aug rcm in 4(a)(3) and take itc to set-off other tax liabilities of august month.
@bensan @saginfotech is this correct?
Yes agreed.
yes correct
I have claimed RCM CREDIT using the same method as explained. I also offset my liabilities. It’s your choice to choose the way of claiming the credits. (Same month or subsequent month)
Sir,
I had purchased goods and used GTA service for transporting goods from Delhi to Kolkata. In Case of GTA I have to pay tax on RCM basis on freight. Sir my doubt is whether I should pay tax as Intra-State ( CSGT + SGST ) or Inter State ( IGST )?
Transporter had not issued me any invoice for Freight he just issued me a money receipt from his local branch in Kolkata for collection freight in Cash.
You have to pay tax as intrastate i.e.(CGST+SGST).
We are a registered dealer in MUMBAI. For sales purpose, I visited New Delhi for 10 days. I spent Rs.20,000 for Hotel stay, spent Rs.7,000 for food expense & spent Rs.15,000 for car rentals. All my input service providers in New Delhi were UN-REGISTERED. My queries ..1) How do I pay RCM i.e. under IGST or SGST/CGST? …2) Will I get ITC on RCM paid?
IGST will be applicable. yes, you can claim input for the tax paid under reverse charge mechanism.
Sir, In july I have to pay reverse charge of 8040. I paid it on 24/08/17. When I can avail input of this 8040 In August or in September, because one of my friend told me that we can avail input RCM on next month of payment (mean in September ?) Please help me.
once u pay ITC can be claimed for reverse charge tax. If u claim rcm ITC in august u can avail ITC for the same in august.
you can take credit of the same in august if it is reflected in your electronic ledger.
SIR, I HAVE GARMENTS MANUFACTURE. I TAKE THE SERVICES FOR UNREGISTERED PERSON FOR STANCHING THE GARMENTS. WHAT I WILL PAY THE 5 % RCM WHEN ITC IS AVAILABLE FOR JULY AND AUG .
Yes you can take ITC. If you deposit in month of july then you can take ITC in July otherwise you can avail ITC in august.
Sir, Can you please let us know the section reference with respect to the ITC claiming on RCM paid.
Thanks
You can refer to section 49 regarding ITC.
Commercial property rented out at Rs.38,000 per month payable to 4 unregistered landlords as follows: LL 1 – Rs.3800; LL 2 – Rs.7600; LL 3 – Rs.12,100; LL 4 – Rs.14,500. What is our liability under reverse charge mechanism?
are you receiver or provider of service?
DEAR SIR, I AM A COMPOSITION DEALER FOR SWEET SHOP BUSINESS, THE SHOP RENT IS 15000/- PER MONTH, IN THIS CASE I SHALL PAY RCM ON RENT OR NOT, OTHERWISE I PAY RCM I HAVE TO TAKE INPUT IN THE RCM CHARGES.
PLEASE CLARIFY SIR
Sir, Under GSTR3B of July, i had entered my purchases in reverse charge column instead of entering it in ITC, due to which i did not received any input credit, but instead it showed me to pay taxes of outward sales and as well as amount of inward purchases which i entered in reverse charge. Please tell me any solution to rectify it, Can i adjust this in GSTR-3B of Aug month
You can rectify this mistake in filing GSTR 1 and GSTR 2 for July as GSTR 3B is only a provisional return.
Dear Sir/Madam,
I just want to know whether in case of Inward Supplies of services liable to RCM, only amount of total inward supplies liable to RCM & RCM liability has to be uploaded or any further details thereof??
You are required to upload only amount of inward supplies and liability under RCM.
Dear Team,
I want to know that when RCM credit is available? Suppose we have paid the RCM liability for the m/o July on 20th Aug while filing GSTR 3. Now can we claim this RCM Credit in the m/o Aug while filing GSTR 2. Please confirm.
yes, you can claim credit for the same in the month of august provided it is reflected in your electronic ledger.
RITENDRA
Sept 12, 2017 at 17:00 Hrs
Can a hotel bill charged with GST avail under ITC which incurred by an employee of a company on his official trip ?
Dear Ritendra, In my opinion YES you can take ITC on official trip, if this official tour is for “furtherance of business” i.e. for expansion of your business and increase market potential, otherwise No you can not. Important in the definition of input tax is the use of phrase “in the course or furtherance of business” so analyse purpose of trip and go for claim.
Sir, I missed reporting RCM in GSTR-3B and GSTR-1 FOR JULY-2017 and have not paid GST under IGST and/or CGST. Even I have not issued consolidated Invoice for this month. What should i do.
Dear Dhanvant, Don’t worry make the payment with interest for late payment, generate consolidated bill and make correction in return GSTR 1 of Aug 17 as amendment of previous month i.e. of July 17
Sir, My uncle has a property which is given on rent @ 50,000/- per month for commercial purpose and the tenant had deduct TDS @10% and GST @18%. My uncle can claim back the TDS through the income tax filling but how to claim back the GST which is already deducted by Tenant under RCM. My uncle total taxable service is Rs 6,00,000/- so he don’t need to register under GST but how to claim back the GST which is deducted under RCM by tenant?
As per RCM provision, every registered dealer receiving services/goods from unregistered seller, then recipient needs to pay tax on such transaction. So in this case limit of Rs 20 lacs not considered.
Thanks for reply but sir he give my uncle 36,900 [ 50,000(RENT AMOUNT)-5,000(TDS)-8,100(GST) ] I want to know how to claim back the amount of 8,100 he deduct on name of GST.
This is Wrong calculation The Tenant only deduct the TDS Amount Only 5000 Only balance Rs.45000 paid to the Landlord. The tenant calculated RCM on the Basis of Total Rent as Rs.50000 (ie.9000) pay to the Government and taken as Input tax on the Following month
SATHASIVAM is right, tenant is calculating wrong.
Hello Sir,
In this case, Is ITC available for the person who is paying GST under RCM for rent?
I am composition dealer registered under GST paying shop rent of rs. 8000 per month to Mr A (unregistered) and also paying Godown rent of Rs. 25000 per month to MR. B (unregistered). Please tell me the applicability of provisions of RCM. whether I am liable to pay GST under reverse charge. If yes, then on which rent either on shop rent or godown rent? and what would be the rate?
Reverse charge on supplies from unregistered persons has been suspended from 13.10.2017 up to 31.3.2017. so it will be applicable up to sept 2017. also if the bill for October is raised prior 13.10.2017 then RCM provisions are applicable.
sir we are purchasing goods interstate and the goods are delivered through GTA unregistered. We have availed the Rcm, now under which head igst , cgst or sgst the tax has to be pad and we have raised self invoice also against this GTA services
IGST will be applicable.
Sir, I am Ajit Tejwani from Bhopal. I have few questions about GST.I have been searching for there answers but unable to find answers.I will be Very Grateful if you answer my questions. I am registered dealer and my GTA(Goods Transport Agency) is also registered under GST. I have following situations when i pay freight Kindly help me .
My GTA charges Rs 250 per bundle Freight and goods.
1.8 Bundles (8*250)—Rs 2000 One Consignment in single day.
2.21 Bundles(21*250)–Rs 5250 One Consignment in single day.
3.24 Bundles (250*8,250*6,250*10) —Rs 6000 in single day
4.3 Bundles (250*3) –Rs 750 in Single day.
5.6 Bundles (250*6)–Rs 1500 in Single day.
Kindle tell how much GST I have to pay under RCM For Each Case. Also Can I pay Consolidated Tax At Month End or daily wise.
No such limit of Rs. 750
Please let us know the rate applicable in case of Work Contract for supply and installation of Electric Lights covered under different GST rates 12%, 18% and 28%. Further please provide us the HSN/SAC code applicable for the same.
RITENDRA 01 September, 2017
Hi, how could we know the rate of GST to pay under RCM on different goods/services ?
You have to check the list provided by GST council.
Dear Sir,
1) Do GST can be levied on Reimbursement of Expenses? I have generated Invoice to B2B Party first without GST & later on Realised that EVen Reimbursement of EXPenses will attract GST.Then i revised the Invoice With GST But Party has mede the payment without GST.I already Paid GST & treated the party as B2B Party .Am i right trating Party as B2B or Should i Treat Party as B2C Party?for GSTR -1 Purpose pls guide us?
2.Also i have learnt that Invoice is to Be Sequentially numbered in GST.But Sir i have for EG STarted My Series from Invoice 101 & completed till 110 but i have not generated Invoice 111 till 199 & again Started Next month from 200?Also in Between i has Skipped Some Invoices unintentionally.But Since September i have Started Maintaining it Sequentially.Sir I maintained Invoice Wise Dietails in Excel.Is there any Penalty for three months of not maintaining the Sequential Order of Invoice.
Request you to Advice on the Matter.
Hi,
We have received rent payment of 16000 from an unregistered supplier and have marked it along with the reverse charge to be paid in GSTR 3B and filed. Do I mark the same in GSTR 1? or is it necessary only in GSTR 2. Since I could not find an option under which it would go in GSTR 1.
My other query is whether I have to raise a self-invoice for the above transaction or just a bill from the unregistered landlord showing rent amount and that the tax amount applicable is through reverse charge is enough. Also under GSTR 2B, what would be the invoice number I need to put there in this case. {Is it the bill number from the unregistered supplier or my self invoice number (if needed)}
Thanks
Reverse charge in case of supplies received from unregistered dealer is to be shown under GSTR-2. In this case , invoice has to be prepared on self invoicing basis.
Please let us know the rate applicable in case of Work Contract for supply and installation of Electric Lights covered under different GST rates 12%, 18% and 28%. Further please provide us the HSN/SAC code applicable for the same.
where I can report my reverse charge in gstr1?
There is no column to enter of reverse charges and tax.
We are builders in Kerala. we are paying rent. Whether we have to declare the GST on rent paid in GSTR 1 and if under which head we have to declare the same.
Reverse charge in case of supplies received from unregistered dealer is to be shown under GSTR-2.
Our GTA is registered in Gujarat and provide Interstate service to us in Hyderabad. He raises his Freight Invoice without GST. We have to pay GST under RCM. My Question is should we raise self Invoice for RCM if we are receiving Freight Invoice with GSTN No of Transporter.
no, GTA will raise invoice stating that tax under reverse charge is applicable.
Hi,
Self Invoice generated of RCM Inward Supply, how showing IN GSTR 1, Specially in HSN Wise Summary Column and B2B Invoices Column
SIR,
I AM DOING BUSINESS OF FASTENER AND I AM PROPRIETOR OF FIRM AND HAVE GST NO. AND I HAVE ONE PROPERTY COMMERCIAL WHICH I HAVE GIVEN ON RENT HE IS UNREGISTERED PERSON NOT HAVING GST SO ON RENT RECEIVED FROM HIM I HAVE TO PAY GST UNDER RCM OR I HAVE TO COLLECT FROM HIM AND IF I PAY GST UNDER RCM FROM MY POCKET THEN I GET ITC OR NOT
u get itc
mam I was submitted gstr3b for july 17 but forget to mention input tax credit on reverse charge what should I do now?
If you have not mentioned your input tax credit on reverse charge then you can claim that credit in August.
u pay gst on RCM or not, if u paid in cash then allow as credit in gstr 1
Whether GST on RCM on inward supplies from unregistered dealers is to be reported both in GSTR 1 as well as in GSTR 2 ?
Yes, RCM on inward supplies from unregistered dealer will be reported under GSTR 1 as well as GSTR 2.
SIR WHERE TO SHOW RCM IN GSTR-1 FOR INWARD SUPPLIES FROM UNREGISTERED PERSONS.
It has to be shown in GSTR 02.
Sir, I am paying GST on RCM basis for the month of Inward supply of July-2017. Should I claim ITC of RCM GST paid in the month of Jul-17 liability in GSTR 3B or Aug-17 tax liability in GSTR 3B? This is not clarified as the GST paid on RCM basis not shown in Electronic credit ledger.
Whether each and every time ITC of RCM will be carried forward manually by the taxpayer?
Hi, I am a registered Dealer but my purchases are mostly from unregistered persons. I have even deposited the GST on purchase from these unregistered persons and filed the return for July month clearly mentioning the type purchase and GST as under Reverse Charge. Can I claim the benefit of this as Input Tax Credit for August month return?
Yes, you can utilise the credit in august month.
As per GST Act, ITC is not available for tax paid under RCM. Refer Section 17(2) and 17(3).
Section 17(2) states that ITC is available to the extent which is attributable to taxable supplies including Zero-rated supples(Exports) and ITC is not available for exempted supplies.
Section 17(3) states that exempted supply includes the supplies under RCM.
Hence as per the prevailing Acts, ITC is not available for supplies under RCM. Experts! Pl comment..
Section 17(3) provides the manner for restriction of common ITC which is used for both taxable and exempted supplies mentioned in section 17(2). In this regard exempted supplies including the supplies under RCM. It can be understood that, RCM supply is exempted to the person who make the outward supply only. for the receiver of the supply it is taxable supply and hence he is paying tax under RCM. Hence the ITC under RCM can be taken as input if the person is making taxable supply for furtherance of business.
You can utilize the itc of tax paid under RCM, but first you need to pay the amount of RCM in cash.
Hi… If i m receiving the services from GTA and paying the tax on reverse charge basis. where to show the freight inward and tax amount in GSTR 1 return?
It need to be entered in GSTR-02.
Whether i don’t want to pay anything under RCM (as there is a input and output for the same amount)
First you need to pay RCM liability in cash and then you can utilise the credit of tax paid under RCM in the same month of payment or in the next month.
Can we utilised this RCM credit against next month RCM liability ?
Hi sir,
I am a dealer in the agriculture sector, hence no GST for my sales. However, i am receiving certain services for which RCM is applicable. Since there is no output tax, i couldnt set off whatever paid under RCM. In this case my doubt is;
1. Whether I want to pay the tax under RCM first and claim for refund?
2. Whether I want to pay the tax and there is no refund (in result i will take it as expense)
3. Whether i don’t want to pay anything under RCM (as there is a input and output for the same amount)
if you are liable to pay tax under reverse charge then the liability for registration arises. Under service tax regime refund is given under similar circumstances(tax paid under RCM is refunded if not able to claim tax credit) the same will be continued under GST.
Where to input ins GST1 , for the reverse tax i have paid . Eg : my office is leased from a unregistered dealer (Building Owner) and the rent is 50,000. I had paid reverse TAX of 9000 during the GST3 Return filling for the month of July. Now my question is where to input in GST1, this transaction, is it to B2C or B2B .
If it is in B2C , there is no provision to identify the translation is reverse charge and if it is B2B , which GSTIN should i put under GSTIN/UIN field,
More over this amount has to refect on input tax credit .
Pls help
GSTR-1 contains only the details related to your outward supplies during the concerned period. RCM paid during filing of GSTR 3b was to be shown in the column of eligible ITC column and then that ITC will automatically reflected in your credit ledger of next month’s return.
Dear Sir
I have many expenses in day to day transaction in different different heads as RCM is applicable where if i purchased from unregistered person. My question is that the limit of Rs 5000 is applicable for total of all expenses a day or applicable on heads like if i spend on stationery Rs 5000 and Rs 4000 on staff welfare now are they both under RCM or only stationery.
Limit of purchase from unregistered dealer i.e. Rs. 5000 is applicable on all the purchases made from all the unregistered dealers in a day.
are purchases by registered dealer from Composite dealer is taxable under RCM?
Hello, I am doing transport business in one state and trading business in another state and i am registered in gst only for trading business. whether i am required to registered for transport business also and please also clarify whether gta is required to get registered if provide interstate supplies?
Dear Sir, How can change in GST regular dealer to composition dealer.
Every registered person under GST and opts to pay taxes under Composition Scheme, must follow the following:
Dear Sir, We have Vat Input Credit forward to GSTR Sum Rs.50000/-. in this credit amount adjust to RCM Paid amount.
Input credit cannot be used to pay tax under RCM.
HI, We are registered in GST and paying commercial space rent Rs.30,000/month to unregistered landlord, do we need to apply RCM. Because as per notification said doesn’t exceed 5000/day.. it means 150000/Month? correct me if am wrong..
As you are paying amount more than Rs. 5000 in a day to unregistered dealer, you are liable to
RCM. Limit to be checked day wise.
HI, We are paying commercial space rent Rs.30,000/month, do we need to apply RCM. Because as per notification said doesn’t exceed 5000/day.. it means 150000/Month? correct me if am wrong..
As you are paying amount more than Rs. 5000 in a day to unregistered dealer, you are liable to RCM. Limit to be checked day wise.