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.
Sir, what rate of RCM is applicable on GTA?
5%
I have paid RCM in last month (August), can I claim last month paid ITC in this month payment (September).
Yes, you can use last month paid ITC in September.
Do we have a date of suspension of reverse charge? I mean do we have to pay GST on Reverse charge for the month of Sept 2017? Please let us know.
RCM provisions related to purchase from an unregistered person is abolished from 13/10/2017 till 31/03/2018.
Sir, Rent for the month of oct 2017 billed on 31-10-2017. Is there reverse charge applicable. Because of rent related to the whole month.
Since the bill has been raised on 31.10.2017, so the reverse charge is not applicable if the landlord is not registered.
Dear Sir,
Could you please explain us about the following situation as the well w.r.t reverse charge:
A construction company having contract payments exceeding INR 5,000/- in a day and we are deducting TDS thereon, the contractor being a un-registered person under the provisions of GST Law. Earlier we use to pay it on RCM basis as we are a registered dealer.
And our query is whether we are eligible to claim the relief granted by GST Council, that Payment under RCM basis has been suspended up to 31.03.2018?
Kindly give provide us with the solution.
Many thanks,
Bhaskar.
GST on supplies from unregistered persons have been suspended till 31.03.2018. thus you can claim relief under the said provision.
Dear Sir, Does it mean that whatever GST which we were supposed to pay under RCM will no longer be paid till 31 March 2018, In that case, what will be the position of GST paid under RCM on availing GTA (Transport) services plz clarify.
As RCM provisions are withdrawn till 31/03/2018, normal provisions will prevail, so the service provider needs to pay tax on services provided after 13/10/2017.
On which location Basis RCM calculated under GST Interstate Supplier (GTA)’s location or Place of Supply means IGST or SGST/CGST?
GST will be levied according to the place of supply.
Sir As per notification is given by govt for the abolishment of Rcm w.e.f from 13/10/2017….. I have received one bill of the guest house of oct month of Rs 10000/- …13 days RCM, I have to pay but balancing 17 days exp…where I have to book ..kindly guide me.
Till the withdrawal of RCM provisions receiver will need to pay tax but after that normal provisions for payment of tax will prevail i.e. service provider will pay the liability.
I have paid GST on transport charges paid to the unregistered transporter for the purchase of taxable goods from the interstate. Please advise me where I have to show this amount in GSTR-2 in which column. Date wise detail required or total is sufficient. Also, I have 50 bills of exempted purchase interstate. Should I have to enter the total of purchase or bill wise detail as same is not populated in GSTR-2
with thanks
As per 22nd meeting of GST council, RCM provisions related to purchase from unregistered dealers have been withdrawn till 31/03/2018.
But till now, you have to show each entry related to purchase from unregistered dealer invoice wise in column 4 of GSTR-2.
Dear Sir
Can a dealer whose aggregate turnover in a financial year does not exceed Rs. 1 crore* can opt for composition scheme for outdoor catering services.
Lakshman
Under GST, only restaurant services are eligible to apply for composition scheme, all other services required to get registered as a normal dealer, if T/o exceeds 20 lacs.
We are in pharma industry now we have to upload opening stock of 01/07/2017 in GST trans-1 how to feed the same in TRAN 1 can you guide us.
Regards
Dear Sir/Madam,
I have one complicated question, Please help me to solve it. We have get Freight service from a GTA in the month of June 2017, GTA gives L.R. (Bill) with Service Tax. We have taken and paid service tax in the month of June 2017. But did made payment to GTA against his service provided. Now in the month of September, we have paid his bill, but due to some issue our company is deducted some amount from his (GTA) Bill and issue Debit Note to GTA. So can you help me about that whether Debit Note should be issue with GST or without GST? Is it necessary to Issue Debit Note to GTA with GST if Bill is from the month of June 2017 (Service Tax Bill)?
Since you are registered under GST, the deduction in the amount will be treated as supply and normal GST will be applicable on the amount deducted since you have utilized the credit for the taxes paid in June or these would have been allowed to be carried forward in the current regime. So no debit note is required to be issued and GST is chargeable on the amount deducted as it will be treated as supply under GST.
Sir, We are from Builder Industry. Whether We have to make payment of 18% GST under Reverse charge mechanism for labour payment or not.
So since Reverse charge mechanism is suspended until 31/03/2018, Is this mean that a registered tenant who is paying rent to an unregistered landlord still have to pay 18% reverse charge on rent ???
No, since the reverse charge on supplies from an unregistered person has been suspended till 31.3.2018.
Dear Sir/ Madam,
As I here about earlier GST Council Meeting. Reverse Mechanism Charges (RCM) shall be postponed til 31.03.2018, is it true. Can you send me the notification link? If it is true then RCM on GTA, Insurance Agent, Legal Advisor (Advocate) etc. also postponed till 31.03.2018 or only Purchase/Supplies from Unregistered Dealer Postponed till 31.03.2018.
Please Reply Me Fast
http://www.cbec.gov.in/resources//htdocs-cbec/gst/20171006_PressRelease_22ndGSTCMeeting.pdf
Do we have a date of suspension of reverse charge?. I mean do we have to pay GST on Reverse charge for the month of Sept 2017? Please let us know.
notification is yet to release.
I also need an answer your question. if you find from anyone. because RCM postponed from 13.10.2017 through press notification and only on Purchase/Supplies from Unregistered Dealer. it means services except u/s 9(3) also not included or not postpone.
yes, RCM will be continued to be applicable on respective services.
Dear sir, I am a Proprietor. I have paid for following expenses,
1. Telephone Exps – Will it attract RCM as GST is already included in Bill?
2. Paid Rs.12000 in cash as Salary – will any GST provision will attract here?
3. Paid Electricity Exps: Will it attract RCM as GST is already included in Bill?
4. Paid for LIC premium an amount of Rs.15954 through cheque: Will any provision for GST be attracted?
One more thing to mention is that I’m Trader.
Thank You
RCM on supplies from an unregistered dealer have been suspended till 31.03.2018. Also, salary to an employee is not covered under supplies so no GST to be charged on salary.
Thnk u sir…..
SINCE, AS PER GST COUNCIL MEETING 4 DAYS, AGO REVERSE CHARGE MACHINIST IS SUSPENDED TILL 31-03-2018. i HAVEN’T SEEN ANY NOTIFICATION ON GSTN PORTAL FOR THE SAME. WHEN THIS CHANGE WILL TAKE PLACE. PLEASE LET ME UPDATE ON THIS. FURTHER AS ADVERTISE BY GOVERNMENT OF INDIA GST IS SIMPLE TAX, WHAT IS BENEFIT OF PUTING REVERSE CHARGE MECHANISM WHEN CREDIT OF ITC IS AVAILABLE.
THE COST OF ALL ELEMENT IS INCLUDING IN THE ASSESSABLE VALUE OF GOODS, THEN WHY USELESS BURDON ON BUSINESS.
The purpose is to increase tax compliances and prevent tax evasion. RCM will put more transparency in the tax compliance.
Sir, rent paid for commercial premises to unregister party, in new recommendations made by Gst Council, It is necessary to pay in RCM now.
no, it has been suspended till 31.03.2018
Dear Madam,
Now that RCM is put on suspension till 31/03/18, what exactly would be the treatment of supply from an unregistered vendor to the registered customer? On the face of it, looks like both don’t pay tax and government has decided to waive tax for such transactions till 31/03/18. But I really can’t believe it!
Regards,
Pre-gst also there was no reverse charge on purchases from an unregistered dealer. So as such there is no waiver. This has been suspended till 31.3.2018 so as to rethink on the issue.
very lucidly discussed on RCM. Thanks a lot
I am in a small manufacturing unit. Is it required that HS codes are required to file the return and claim RCM? If yes kindly give me the codes for the following
HSN codes are not required to be mentioned if the turnover is less than Rs. 1.5 crores. RCM has been abolished till March 2018.
Thanks a lot for the prompt response.
A recovery agent service provider covered under RCM and registered under GST. (As the tax liability is with service receiver). A registered person has to file GST return, is there is need to file the return by the service provider(recovery agent)? Please give step by step procedure how to show the outward supplies in GST returns.
Every registered person liable to file the return. In case of services covered under RCM, the service provider needs to mention only turnover amount and did not mention tax amount in return.
1.What are the expenses on which RCM is applicable?
2. We have paid tax on inward supplies from the unregistered dealer under reverse charge for the month of July, how can we claim that tax paid while filing the return for August?
Please read the blog thoroughly.
SIR, RS.5000/- LIMIT APPLICABLE FOR CASH PURCHASE OR TOTAL DAY PURCHASE FROM UNREGISTER DEALER?
In case purchases from unregistered dealer exceeds Rs. 5000 in a day whether for cash or credit then RCM applies.
thanks Sir,
Hi, In our case, we have to pay GST under reverse charge for GTA, Import of services. However, we are not eligible for taking the GST credit (as our output is exempt). In such a case while filing the return, without GST number it is not allowing to make payment and credit will be shown in the GST network? Can you provide the solution Please?
Regards
Venkat
Dear Sir, We are showing expenses – NON GST/NOT APPLICABLE: – like Salary to staff/ Electricity expenses every month. Do We have to show these figures in GSTR 2. There are exempt expenses every month. Should We show those figures in GSTR 2?
no, these expenses are not required to be shown under GSTR 2.
I do not have any sales/purchases(i.e no normal GST liability has arisen in this month i.e.September) but I have paid RCM for last month (August) and also have RCM liability for this month (September). Please Let me know how I can claim ITC for RCM paid in the last month (August).
You can claim ITC for the tax paid in Aug and sept when you have tax payable in the subsequent months.
Dear Sir/ Mam,
We are into TV industry, where we have to provide for Food and Car for Artists for the shoot, which forms the part budget and eventually part of our billings to broadcasters. In our case, whether GST on these food expenses, Vanity expenses, motor card expenses for pick up and drop of Artists and Make expenses which are incurred during the shoot which also be ineligible for credit? Do revert me back. The detailed reply would be much appreciated.
Thanks in advance
You can claim the credit for these expenses incurred provided you provide your GSTIN to the other party.
if we spend in the following manner during the day, what will be the amount payable on RCM method,
stationary expenses( from unregistered ) 2000,
transportation expense ( unregistered ) 4500 and repairs expenses 6600
The tax will be paid under RCM on the whole amount of 13100 as per the rate applicable on the particular items.
Thank you for a quick reply, but purchase from an unregistered dealer up to Rs.5000 is exempted, right? therefore stationary expenses won’t be exempted?
If the aggregate purchases from an unregistered dealer are more than Rs.5000 in a day then reverse charge will be payable on the whole amount.
thank you
Dear Sir/Madam,
I have some queries on Job Work Charges. Our company is a manufacturing unit (Registered Under GST), and we are taking job work services from another Registered Manufacturing Company. Means Our Company is “Principal Company” Supply “Input” (Chemical Product) to Another Company who is “Job Worker” for processing.
So When we supply input to job worker, we issued challans. At the time of receiving the furnished product form “job worker” in given time period. how GST implemented on the same. Means “Job Work” issued Sales bill With GST or Without GST. If GST is Applicable then GST Rate Please
If the job works amounts to manufacture then it will be treated as sale and GST at the rate applicable on that particular item will be chargeable. If it does not amount to manufacture then it will be treated as a service and GST will be chargeable @18% on the service portion.
In the month of July, I have paid 5000 rupees to a GTA.
Now, I have following questions regarding the above:-
1) How to Claim RCM on the amount paid??
2) If RCM has been paid, where to show in GSTR 3b for the month of July?
3) Where to show GTA Services Received & RCM Paid thereof in GSTR 2?
You are liable to pay GST under RCM for the month of July. In GSTR 3b, it has to be shown under inward supplies liable to reverse the charge. In GSTR 2, GTA service received and RCM paid has to be shown under head “Inward supplies on which tax is to be paid on reverse charge”
1) Please let me know the step by step process from depositing tax arising out of inward supplies attracting RCM to Claiming its credit in GSTR 2?
Hello,
I am a trader and dealing in the interstate sale. I paid the freight to the transporter in cash and not issue any bill. In August GSTR3B I have charge RCM total taxable value 40000 and paid RCM 5% on freight inward. I have also claimed ITC RCM SGST Rs.1000 and CGST Rs.1000 in the same month at the time of filing GSTR3B form.
Can you please advice should I issue the bill and advice I have to fill the correct form or not?
If a registered transporter of other state provides the service to me, the transporter is also registered. Freight is less than 5000/- and I am also registered. What will the effect in RCM? Please assist me.
if you are availing services of a GTA who is registered then RCM is applicable on your case and you have to pay tax under RCM.
Dear Sir/Madam
Please clarify Car Rent and Car on Hire. Our Company is paying car rent (Not Car on Hire) every month to an unregistered dealer, which is used by company directors. We have paid GST under Reverse Charge Mechanism in July and August. Shall we claim ITC on Car Rent or Not. If It is ineligible for ITC then specify it.
Yes, you can claim ITC for tax paid under RCM for car rental.
But Car is Used By Directors of Company, Then also we can claim ITC. As per my knowledge, ITC on the vehicle is available only if it is used for the purpose of business (Transportation of Goods or Furtherance of Business). As you said we can claim ITC, then please specify the section.
As the company has been paying the expenses and if the company claims these expenses in their financial statements then these will be considered as an expense of the company and then the ITC for the same can be claimed as these are considered for purpose or furtherance of business.
Ok thank you for your help and suggestion.
Again, I very much doubt your answer as ITC is blocked on conveyance u/s 17(5)(a) of CGST Act, kindly clarify on my email.
I am real estate broker I have not registered with GST because I was not aware that even Real estate agent has to register GST.
Now I have to raise my bill for 3.12 lakhs from the builder.
Now builder says that he will deduct 18% GST and pay to government from my 3.12 invoice by giving me 2.55 Approx in hand.
Now my question is 1) I have applied for GST so can I claim 18% GST back which builder have paid from my invoice because I am unregistered.
2) If I have received GST number then how should I charge my invoice to builder suppose Ex 1 lakh brokerage so should I submit 1.18 lakh bill and take tax and pay to government or builder will pay me 1 lakh and pay 18% GST of own?
What if builder refuse to pay GST on my raised bill?
Kindly help my Father is suffering from Cancer and I am not able to raise bill due to this call complication.
First, of builder cannot deduct GST from your basic bill amount. As you are unregistered he has to pay out of his pocket. And if you got registered then you should raise your bill charging GST in bill & builder will pay you whole amount & you will pay GST to the government. for example, if your bill amount is Rs. 100000/- then GST will be 18000 so total bill amount will be 118000.
Builder will pay you 118000 & you will pay 18000 to the government as GST.
Builder can not deduct GST from your invoice value as you are an unregistered dealer. He has to pay the same from his own pocket and he will get the credit for the same.
Hello, I have paid GST amount on reverse charge mechanism in transportation. I have one doubt. Transportation charges including labour and other charges. how to calculate GST in RCM basis on transportation with labour charges, other charges or without. tell me
Dear Sir/Madam,
I have one query about ITC on Car Rent.
Our company is using a car for director’s, on the rental basis. The car is owned by an unregistered dealer, our company pay car to rent. We paid GST in Reverse Mechanism. Now I have a question about ITC on Car Rent. Can you tell me about the same?
Shall we take ITC on GST Paid on Car Rent under Reverse charge?
ITC would not available for rent-a-cab.
Thanks For Your Reply.
Means Our Company Is Liable To Pay GST on Car Rent, But Would Not Available ITC on The Same
Yes
Transport charges calculation GST amount with labour charges or without labour charges
can I take ITC, if i have paid RCM @ 5% on Freight Inward
You can claim ITC of RCM liability only after paying in cash first.
Suppose RCM GST paid for July month on 15 August. Can we use the said RCM-Input against Normal GST liability of July Month or August Month?
You can use in for the month of August.
Hello
We are a Manufacturer of Engineering goods. We need to Buy RM from Unregistered dealer, persons etc from within West Bengal only.
Also there are some freight(GTA), Logistics, Courier costs bourne by us which falls under RCM for the purpose of sending material and even documents in same state sm times in other states also.
My query is
1) while paying RCM on unregistered purchase of Raw material in which head should i pay to is it IGST and compensation cess or CGST SGST and which return should we show this ?
2) All our freight(GTA), Logistics, Courier costs bourne by us bills are generated within Bengal only though Billing purpose may be sending things to some other state, then which A/c should we pay the Tax to ? IGST and compensation cess or CGST SGST and which return should we show this ?
1) As you are purchasing goods from unregistered dealers within same state, so CGST and SGST is applicable in this case.
2) Place of supply in case of movement of goods is the place where goods are handed over to recipient.
As your transporter and you are in the same state and place of delivery is also in the same state so CGST and SGST is applicable in this case.
All liabilities related to RCM should be shown under GSTR-3b and GSTR-2.
What is the GST impact for availing services of online portal located outside india for booking a hotel room located in india and payment is made in USD using international credit card, by a person in india?
(1)what will be the impact if the person availing such service is not registered person under GST ?
(2)what will be the impact if the person availing such service is registered person under GST
We are a training provider company , GST registered in Telangana. We are occasionally hiring trainer on requirement basis from other state to provide training services in different state. The trainer are not GST registered. My question is do we have implication of RCM when we pay to the trainer ? If YES, as trainer are from different state what are the implication as what I understand is no tax credit for interstate supply?
If you are hiring services of unregistered person then RCM provision becomes applicable in your case. Credit will be allowable of the igst.
Thanks for the prompt reply.
I understand that reverse charge is applicable, but in my case the inter state supply exist (Trainer located in ABC state but our company in XYZ state and service provided in ABC state), and when i am filling GSTR 2 it’s showing ineligible credit. In this case i am loosing my ITC. Please guide me.
Place of supply in case of Trainer services provided to registered person is “Location of recipient”. So in this case IGST is applicable.
Sir, there is a lot of confusion regarding ITC of RCM paid. I have one query. I have paid GST of Inward Supply RCM in cash of the month of Aug,17 in Sep,17.Now, can i take credit of same in Aug,17 GSTR-3B return or should i take it in Sep,17 GSTR-3B since as per GST TWITTER,they say that as soon as u pay in cash in the month u claim in the same month. So should i claim it in Aug or Sep GSTR-3B return. and if in AUg, then whether i would have to write GST amt both in 4(a)(3) and 3(d) of outward. please help me out.
Yes you can claim the credit of such RCM liability in the same month of return, and you have to show it in both columns i.e. 3.1 (d) and 4 (A) (3) of GSTR-3B.
Notification ?