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.
FEBRUARY REVERSE CHARGE NOT DEPOSITED TILL NOW IS THERE ANY INERTEST OR PENALTY ON REVERSE CHARGE AMT. IF I DEPOSIT TODAY
Interest @ 18% p.a. to be calculated on days basis would be charged on tax amount.
IS INTEREST CALCULATED FROM 21 MARCH TO 19 APRIL? PLEASE GUIDE.
Yes
We have supplied the goods to our vendor through registered GTA and raised the invoice to our client for Transportation charges and charge GST on it and also filed return against same. We have not paid the GST under RCM. So now what can we do? We need to pay RCM or not. Please advice.
In case of GTA services, whoever pays to GTA will be considered as service recipient and GTA also raises bill of supply in that case, so you have to pay tax under RCM for GTA services availed by your client.
Dear Madam,
Need your urgent views on below:-
We are the service provider and we have both services like Taxable and exempted. We are paying rent for the premises which is being used for generation of taxable and exempted services. We also paid GST on rent of premises which is being used for both the services.
It is regarding the ITC of GST paid on rent, we have calculated the turnover ratio monthly and made the working and we are going to avail the same on March 18 return.
Please correct us if we are doing wrong and treatment in the GST return may also be advised.
Yes, you have to divide the total ITC on the basis of taxable turnover and exempt turnover.
We are a registered in GST & We paid shop rent for July-march 90000/- to unregistered person as on 31.03.18. Can we liable to take pay tax under RCM?
You will be liable to pay tax under RCM for the period 01.07.2017 to 13.10.2017. After that RCM on supplies from unregistered person has been suspended. You can take the credit of the tax paid under RCM.
I have used services of a GST registered Transporter and he has raised Invoice stating RCM applicable?
1) What will be the GST Rate
2) Can i claim the GST amount which I will be paying
(i) 5% without ITC
(ii) Yes, you can avail the ITC of GST paid under RCM
Dear Madam,
I have paid GST under RCM in the month of July, August, Sep & October (up to 13.10.17) but still not claimed ITC, Can I take ITC in the month of March 18 Return.
Yes, you can avail input tax credit in the month of March for the tax paid under reverse charge earlier.
Dear Mam
Kindly advise on following things.
Scenario I :
We are registered dealer based in Mumbai availing services of a registered GTA based in Delhi for transportation of stock from Mumbai to Delhi. The final destination of stock is Delhi and to a registered a dealer. Transportation charges will be paid by us. Please advise whether we should deposit IGST or CGST & SGST?
Scenario 2 :
We are registered dealer based in Mumbai availing services of a registered GTA based in Mumbai for transportation of stock from Mumbai to Delhi. The final destination of stock is Delhi and to a registered a dealer. Transportation charges will be paid by us. Please advise whether we should deposit IGST or CGST & SGST?
As freight will be paid by you, and GTA is also registered under different state, so IGST will be applicable.
If a registered GTA raising bill to another registered GTA for freight.
1. Whether RCM applicable?
2. What will be the GST impact?
Please guide me.
Thanks
if you are taking services of GTA on rent, then it is covered under the exemption list.
Services provided to a GTA by way of giving on hire motor vehicles for transportation of goods is exempt under GST. Otherwise, it will be covered under RCM.
Our company is unregistered under GST. We want to pay legal fees to an advocate who is also unregistered? Do we need to register under GST?
Please suggest if the payment is exceeded Rs. 5000 or above rs.5000/-
please also mention the section number.
If by wrongly RCM on GTA has not been paid is there any interest provision
and
if GTA IS UNREGISTERED IS THERE ANY RCM PROVISION?
If a GTA received another GTA service then what is GST provision applicable? whether in this case reverse charge applicable
If both are unregistered then no tax liability will arise but if either one is registered, RCM provisions will apply.
Dear Chanchal,
I have made an Inter-State Purchase in the month of July and the Goods were received by me in August through Registered Transport. Complete Detail is mentioned below:
Date of Purchase Invoice- 19/07/2017
Goods Received and Transport Charges Paid- 12/08/2017. Transport Charges Paid is liable for RCM.
Purchase shown/entered by me (Purchaser)- 12/08/2017
RCM is shown in GSTR-3B in the next month (Before 20th September), for the Month of August (Inward Supplies Liable to Reverse Charge Column of GSTR-3B).
The tax of Rupees 226/- Paid (5% of 4527) as Rupees 113/- each of CGST and SGST in Cash, on 19/09/2017 and Filed GSTR-3B. Claimed ITC of Rupees 226/- of RCM in the same Return i.e. GSTR-3B, for the month of August
My Questions are:-
1) Have I claimed the ITC on RCM correctly? I mean to say Goods received and Transport Charges paid by me in August and Purchase is also shown in August, whereas the Goods were Invoiced and Dispatched in July. ITC claim of RCM has to be in which month’s return?
2) Since it was an Inter-State Purchase (Tamil Nadu to Uttar Pradesh), is it correct that I have paid tax as CGST and SGST? The Transporter is Registered in 3rd Location, i.e. Kolkata.
I would request an early reply as today is 19th and tomorrow is the last date of filing GSTR-3B.
(1) Yes, the claim of ITC under RCM is correct in the month of August as according to the place of provision rules in case supply of goods is liable to RCM the liability to pay tax to arise on receipt of goods or date of entry in books of account whichever is earlier. As tax is paid in August credit to be claimed in August only.
(2) In case of an interstate purchase, IGST needs to be paid and not CGST and SGST.
Thanks a lot for treating my query, an urgent one.
1) I would like to re-mention, here, the matter is not of supply of Goods, but of Service taken by Registered Transport.
2) Can this be rectified, as I have committed this mistake of paying CGST & SGST instead of IGST, 4 times since July?
Dear Sir
I have a query. I am registered dealer in Delhi, I have supply goods Outside Delhi through transport freight value 30000/-, but I did not charge freight amt in bill during the time of supply, now what to do, should i have charge freight amt through debit/credit note, plz also confirm may i liable to charge GST on said amt to my client or not billing month Sep-17 freight Bill Date Mar-18
As freight charges have to be included in bill and GST rate of goods will be applied on that, so you have to issue a debit note.
Sir, We have a partnership firm we received purchase bill of services by (caterers or marriage hall ) by the registered supplier but we don’t have service tax registration, we have registration of GST, in that case, can we get an input tax credit.
if yes so what will be the entry we should pass. Please guide us.
Yes, the credit of GST on a supply of services by the registered dealer can be availed if registered under GST regime. For this, the entry for purchases should be:-
Purchases a/c Dr.
CGST/SGST/IGST credit a/c Dr.
To Supplier a/c Cr.
Sir, can you please clarify the Input tax credit for capital goods purchased can be claimed in one go in next month of purchases?
Yes you can.
Our company is registered under GST and taking services of GTA to deliver material interstate and intrastate. May I request you to please confirm in case of Interstate (Outside the State) delivery, we need to pay IGST Or CGST/SGST under reverse charge mechanism?
You have to pay CGST/SGST under reverse charge.
Thanks for the reply.
I want more clarity on the issue: What would be the kind of GST (whether IGST or CGST/SGST) applicable under RCM in following cases of payment to Transporter:
•Interstate procurement of goods ( from Delhi to Kanpur). Delivery at Kanpur works and transporter is registered in State of Delhi and freight paid by us.
•Interstate delivery of Goods from Kanpur to Chennai. Delivery at Chennai and transporter is registered in Kanpur and freight paid by us.
Place of supply in case of supply by the registered person is “registered place of the recipient”.
Thanks for reply
But I am still confused. I understand from your reply in case transporter is registered under GST in other state and recipient of services is in other states hence service receiver needs to pay IGST under RCM.
And if transporter and service recipient both are in the same state hence CGST/SGST needs to be discharged by the service recipient. Please correct if I am wrong.
Yes agreed
GST helpline said that no need to pay GST on freight from unregistered. GTA while CA said you have to pay?
What should I do?
please reply.
As per law, if unregistered GTA is providing services to an unregistered dealer then dealer does not need to pay tax under RCM.
whether I can get ITC paid Under RCM? Where it will reflect in GSTR-3B?
Yes, you can claim ITC and you can show it in under column “Inward supplies liable to reverse charge” of Eligible ITC column in GSTR-3B.
A Director gets sitting fees which is is chargeable on RCM basis by the Company. If the Director is registered under GST for other business, does he have to raise an invoice on the Company. If yes then in GST3B where is entry made I.e. under section 3 would it be a b c d or e. What happens when R1 is filed?
As services provided by Director is specifically covered under RCM , so only Bill of supply will be issued in that case.
If GTA is registered and collects GST in the Invoice whether the recipient of service who is a registered under GST has to pay GST on reverse charge? If no the recipient can claim input tax credit on GST charged by GTA.
If I have received any services from out of the country (service amount in EURO) and I have pay rupee by credit card but I don’t understand that I have no invoice received for this service then how to pay GST and how to raise an invoice for this service.
Please suggest.
If any sale made by GTA Like Scrap (Tyre & Spare Part) are Taxable for GST? if all sale of GTA covers Under RCM Base & GTA Registered Under GST.
if Taxable Rate of Tax?
My client is Registered under GST. He has received goods Transportation services from Any Trucks / Tractors and paid through vouchers. He is C& F and issued an invoice to the company for Goods Transportation Charge.
Now, what is his liability so far as he has paid through voucher and if liable to pay GST can he claim ITC? Company to which he has to raise bill is ready to pay GST under RCM.
Kindly guide me in this regards.
In case of GTA service, the tax has to be paid under reverse charge.
The service provider is out of India and recipient in India but service provided in out of India. (Service provide from Outside India to place of receipt outside India and billed send to India) Can we liable to pay Tax in RCM?
Place of supply shall be the location of the service recipient since it is an international transaction. accordingly, import provisions apply.
I have registered in composition scheme, I have purchased from URD in another state, I am ready to pay tax through RCM, but the law states that URD can’t sell goods in other states irrespective of his turnover. How you view this scenario? Is this effect to both supplier and me?please …
Yes, in case of an interstate transaction, composition scheme can be opted for.
SIR,
My dealer goods purchased from out of state. the above goods registered lorry transporter charges is 95000/- payable, on transport charges under reverse charge pay tax @5% on cgst+sgst or IGST?
Yes. in case of GTA tax has to be paid under reverse charge. In case the place of business of the transporter is within the state then CGST+SGST is applicable otherwise IGST is applicable.
I have not paid RCM on Freight charges from July to till date, Can I pay now and availed input credit?
Yes, you can pay the tax with interest @ 18% p.a. and can avail the ITC from the next month of payment.
Sir, I am a regd. dealer but my all purchases were from URD for the month of Aug, 17, then I will have to pay RCM, if I pay RCM against URD Purchases, then I can take ITC next month Sep’17, which amount pay against RCM and adjust output tax sir please tell me detail.
You can include it in output tax liabilities under the head “inwards supplies liable to reverse charge” and thereafter may take credit of the same under “eligibility ITC column” This amount cannot be adjusted against other ITC available and has to be deposited through challan only.
Hi, How to raise the invoice RCM?
You have to issue tax invoice mentioning the invoice as invoice under RCM.
Sir, August month reverse charge amount deposit to GST account but this amount can’t take under eligible ITC, please tell the solution for this problem.
You can take input tax credit if you have paid tax under reverse charge.
If we have paid official filing fees in England and we are reimbursing the same to the consultant on the cost basis. Are we supposed to pay GST on RCM in this case?
Hello Maam
I am Working in the manufacturing industry. Please guide on the following issue.
We procure material under advance license and we apply for license closing after despatch of finished goods. When a license is ratified, any quantity which is excess procured under license is subject to payment of customs duty like BCD, CVD and SAD etc.
We have licenses of 2014 wherein we have paid duty as mentioned above on Nov 17. How can we account CVD and SAD which are eligible duties either as ITC or refund
Sir, SINCE RCM ON GTA, has not been postponed in 22nd GST council meeting, WE HAVE TO PAY GST ON GTA SERVICES under RCM. Could you please let us know the rate of GST for taking ITC on GTA services.
Rate of GST on GTA is 5% (if GTA don’t want to avail ITC on input services) and 12% (if GTA want to avail ITC on input services)
Madam,
We are service receiver-GTA in not charging any GST in his bill. So we have to pay the GST on RCM basis. Then we want to pay the GST and take the ITC also. At this juncture what % GST we have to pay to avail ITC on payment of GST on GTA services.
As GTA services are covered under RCM, so service receiver needs to pay the tax @ 5% and also he can avail the ITC for the same in the next month of payment.
Hi, Is RCM applicable on foreign remittance (commission)?
Yes, it is covered under RCM.
I am a travel agent in Mumbai dealing in Flight Booking, Hotel and Packages from the travel operator From Haryana. Airlines are charging GST to the Customers, I am given commission from the travel operator. I raise invoice with Travel operator in the month end for IGST RCM..and I raised on 4th Jan.2018
Also, I do not keep any markup or processing charges to customers.All invoices are below Rs.250000.GST B2C is nil to non-register dealer
My Question is: How to file GSTR 1?
B2B if I file return for December filling all details of supplier GST no.ect, the date on which I have raised Invoice falls outside Date i.e 4th Jan.2018
Need your suggestions.
Thanks and Regards
As you have raised an invoice in the month of January 2018 you need to show this invoice under GSTR-1 for January month only.
Hello Ma’am,
I have received GTA services from a registered GTA in Nov’17. I filed the Reverse Charge through GSTR-3B earlier. Do I (as a receiver) need to make an entry in my GSTR-1 of Nov’17?
As GSTR-1 is sales return, no invoices related to purchase will be entered.
Usually, I am furnishing the rent (paid) based on reverse charge mechanism @ 18% taxable for Rs. 10,000. It has been stopped 13.10.2017 onwards. Is it required to mention the rent amount Rs.10,000 in GSTR-3B (either in exempted inward supply or somewhere other)?
Rent amount is not required to be specified in GSTR 3B.
Is reverse charge on Rent paid to an Unregistered person is still applicable after 13.10.2017? Do I need to pay GST under Reverse charge if am paying rent to an unregistered person? Please clarify.
RCM provisions related to unregistered person has been on hold until 30/06/2018.
Dear Sir,
Is reverse charge on receipt of advocate/legal fee is still applicable post 15th November 17 under GST Regime?
Please revert..
Thanks
Yes, since the reverse charge is suspended only for goods purchased from unregistered dealers. so it continues to be applicable on services.
Sir/Madam kindly advice for my two problems
1) my unregistered transporters office is in Kolkata he raised me a bill for transport service of Mumbai to Nasik, under RCM which tax, I have to pay IGST OR GCST+ SGST?
2) we are mfg co. we signed work contract, right from a supply of pipes, installation & commissioning inclusive of all Taxes, from my suppliers’ premises we supplied the pipes to that work site, my supplier raised GST invoice mentioning buyers name & delivered the material to our work site (i.e.MIDC site End User). as a buyer should we also raise GST invoice in the name of MIDC? & pay tax at the time of filing return?
Thanks
1) If service receiver is registered, then place of supply will be the place of such registered person. So
in your case, CGST+SGST will be levied.
2) Works contractor are liable to pay 18% GST (with no ITC) on all outward supplies.
I think mam in the second case ITC can claim because this service is different from construction from immovable property. if I am wrong please let me confirm.
Yes agreed, On a works contract, ITC will not be available for the construction of immovable property (other than plant and machinery).
I had paid RCM for the Sept 17 on Oct 17 now can I claim ITC on the month of Dec,17
Yes, you can avail the ITC for the same, subject to credit available in your credit ledger.
Hi, Please help someone where should I show RCM details in Return?
Dear Sir, I have filed GSTR-1 and put the wrong GST no. of party please advice me how to correct this as the purchase is demanding to correct this please advise.
You can make the correction while filing GSTR-1 of the succeeding month.
Banking company pay RCM in the month of August, in September month he takes full credit of tax paid under RCM in August month or he takes 50% amount of Tax paid under RCM.
Banks are required to reverse their 50% ITC available on inputs, inputs services and capital goods.
Dear Sir,
I am a registered GTA, and I have issued a taxable invoice to my customer under RCM. The tax is to be paid by the service receiver. So, while filing my GSTR-3B Return, where would I have to show my invoice amount. As well as I have to file the same in GSTR-1 also ??
In GSTR-1 you have to show it in the 4B column of a B2B section.
You Just need to file nil return. No need to show invoice value.