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 If a company say X LTD is exclusively engaged in “exempted supply or non-levy supply” …. and is taking directorship services (falling under RCM). but while paying director fees the company on RCM have to compulsorily make registration…So ultimately my question is whether the company is required to register or not..!!??
Yes, you are liable to get registered since you are liable to pay tax under RCM.
As per section 23, if a person is engaged in supplying exclusively exempted supply, then he is not required to take registration.
As per Section 24, it override section 22(1) i.e threshold limit of Rs 20,00,000/10,00,000. But not override section 23. Hence registration is not required.
An UNREGISTERED PARTNERSHIP FIRM UNDER (GST) PAID OF RS. 10000.00 TO ADVOCATE AGAINST CONSULTANCY FEES, SHOULD BE PARTNERSHIP FIRM TO PAY GST UNDER RCM (REVERSE CHARGE MACANISHAM)?
IN CASE OF REGISTERED TRANSPORTER HAD SUPPLIED SERVICES TO ANOTHER REGISTERED DEALER
MY QUESTION IS RECEIVER OF SERVICES MADE RCM AGAINST SERVICES FROM REGISTERED TRANSPORTER
THEN SUGGEST ME WHETHER ITS NECESSARY TO MAKE PAYMENT VOUCHER.
Yes, payment voucher is necessary in case of R.C.M. transactions.
I have a GSTIN as I am required to collect and deposit GST on my Consultancy Charges.
I am also the recipient of Director’s Sitting Fee which is subject to Reverse Charge and payable by the company where I am a director.
While filing monthly GSTR 3B Return whether I show the invoice amount under 3.1 (a) Outward Supplies (other than zero rates, nil rated and exempted) without showing the tax amount that recipient of service pays?
In Quarterly GSTR 1 filing, it appears that invoices for Director’s Fees are to be included showing those as under Reverse Charge (as the noting says “Total Tax Liability including Tax payable by Recipient on supplies attracting Reverse Charge” should show there – “although these will not be part of actual liability to be computed on filing of GSTR 3”. Please advise on this as well.
Please also advise when from GSTR 3 will have to be filed? I have so far filed GSTR3B monthly and GSTR 1 Quarterly (turnover far less than Rs 1.5 Crore).
As both the activities are separate, you have to take new GSTIN for director services and need to pay tax under RCM and you have to show it in under column 3.1(d) of GSTR-3B and also in GSTR-2 and till now dept. has not released GSTR-3 so till that time you only need to file GSTR-3B and GSTR-1.
I am thankful for this advice.
I was only wondering how I can take separate GSTIN for this activity or for that matter, does one require to have more than one GSTIN if he follows more than one activities.
Can you please refer me to the relevant GST rules.
In fact, in case of some other persons whose earning are mostly from Director’s Fees (i.e. very little from other services), I understand that they are not even filing GST returns.
I also notice that 3.1(d) refer to Inward Supplies (Subject to Reverse Charge) whereas this appears to be Outward Supplies from my perspective.
Please help
Sir,
We are a registered dealer under GST and are paying also GST on Transportation charge in all the months till date under RCM and mentioning the same only under GSTR 3B Column 3.1(d), but due to ignorance, such amounts are not been mentioned in Column 4(3) of GSTR-3(B) in all these months. My GSTR-3B Return for the month of May/2018 is pending to file. Can I put all the left out amounts of the previous months in Column 4(3) of GSTR-3(B) Return for the month of May/2018? Whether we can claim for the ITC of the same. Please clarify.
My query is related to Applicability of RCM on GTA. Tell me whether GST shall be paid by consignee if Consignment note is in name or Consignee but Payment of freight made by the Agent?
GST in case of RCM under GTA will be paid by the payer of freight.
What is the position of RCM under GTA;if the C& F agent arranges the GTA on the principals behalf and pays the GTA.
The c& f agent charges these amounts in his C& f services Bill on The Principal and charges 18% GST.
Sir,
We are a registered dealer under GST and are paying GST on Transportation charge in all the months till date under RCM and mentioning the same only under GSTR 3B Column 3.1(d), but due to ignorance, such amounts are not been mentioned in Column 4(3) of GSTR-3(B) in all these months. My GSTR-3B Return for the month of May/2018 is pending to file. Can I put all the left out amounts of the previous months in Column 4(3) of GSTR-3(B) Return for the month of May/2018? Whether we can claim for the ITC of the same. Please clarify.
Yes, you can claim all your pending ITC in MAY return. As any omission in any return of F/Y can be rectified up to Sept. following the end of F/Y or date of Annual return whichever is earlier.
Many many thanks for solving my confusion.
Dear Professional
I have a query regarding ITC on RCM paid on import of Service (OIDAR) we are dealing in OIDAR services under B2B and we supplied more than 80% of our all supply to exempted educational institute/university who provides degree by law.
My question is:
a) We have to pay RCM on our all import (OIDAR) or only the comparison to outward taxable supply. Or
b) if we pay RCM on all Import, can we get 100% ITC on it and how we can claim the refund because our taxable supply other than exempt entity is only 20% of all supply.
c) sales made to the exempt entity will be considered @ 0%, exempted sales or elsewhere in GSTR Returns
d)
Your Immediate reply on this matter will be highly appreciated
Dear Professional
I have a query regarding ITC on RCM paid on import of Service (OIDAR) we are dealing in OIDAR services under B2B and we supplied more than 80% of our all supply to exempted educational institute/university who provides degree by law.
My question is:
a) We have to pay RCM on our all import (OIDAR) or only the comparison to outward taxable supply. Or
b) if we pay RCM on all Import, can we get 100% ITC on it and how we can claim the refund because our taxable supply other than exempt entity is only 20% of all supply.
c) sales made to the exempt entity will be considered @ 0%, exempted sales or elsewhere in GSTR Returns
d)
Your Immediate reply on this matter will be highly appreciated
As per RCM provisions, if the service provider is situated in a non-taxable territory, and service recipient is in the taxable territory then tax will be paid under RCM.
1) For all services, RCM will be applicable.
2) You can claim the ITC of tax paid under RCM and can also claim the refund by filing RFD-01 form.
3) Supplies will be treated as exempt.
I am running a manufacturing business. I have forgotten to tack some transport bills in RCM for the month of May-18. Please tell me what should I do to correct the same.
Pay the RCM tax for GTA services received. As of now there is no option to rectify the returns, so you can show the same at the time of match- mismatch by the department.
Sir,
If a registered GTA is providing services then in which column of GSTR-3B and GSTR-1 he needs to show his supply of services. And TAX on these supplies has been deposited by the receiver on RCM basis.
AND
Do a transporter require to mention GST tax amount on his Bilty and is he required to issue normal Bilty or invoice
plz reply sir
As GTA services are covered under RCM, so GTA service provider will enter only taxable sale amount in the column “outward taxable supplies” of table 3.1 of GSTR-3b, tax amount columns to be left blank.
There is no option of mentioning the only turnover because if turnover is mentioned then the tax also have to show otherwise the data will show error “once turnover has been shown then tax amounts cannot be left blank”.
I just want to know that I am GTA registered in 2 states, in one I am following the rule of reverse charge and my clients are paying the reverse charge but in another state. I am charging them GST @12% as some clients do not go in reverse charge method.
I just want to confirm that I can do this or am I doing anything wrong.
We take the legal service from an unregistered law firm and accordingly paid RCM on it and next month we claim ITC on it. My question is that where to show this in GSTR 2 (when applicable).
My second question is that we take transport service from GTA and paid RCM on it but how to claim ITC on it.
kindly provide info
thankyou
You need to show it in Table No 4 of GSTR-2. Services received from GTA- ITC can be claimed in the same month in which tax under RCM is paid.
A registered dealer under Automobile trade is also providing insurance services and in turn, he receives Insurance C omission from General Insurance Companies which is Liable under Reverse Charge U/s 9(3), while Filling his monthly 3B return how should he report Turnover under RCM and tax paid thereon.
Further in another case March 3B return was wrongly filled as NIL whereas there was tax liability, the same was detected and sumotto NET TAX (Tax Liability as reduced by ITC) was paid by challan since it is a Financial year change can we reduce the extra Credit in Cash Ledger by showing excess TAX Liability in April Month further do we need to increase the Turnover also in 3B of April my understanding is that we should only increase the Net Liability (CGST/SGST & IGST) without changing turnover of the April Month .
You need to show the taxable amount under RCM in Table 3.1 point a) outward taxable supplies, without the GST amount. In answer to your second query, ensure to file correct GSTR-1 for the month of March. Your GSTR-3B will be rectified during the match-mismatch process by the
department. You can increase the tax liability of April Month, but then you will be required to rectify GSTR-3B of April month also during match-mismatch.
Please tell me in the following case whether SGST and CGST will be applicable or IGST, under RCM
Our company have received GTA services from an unregistered person, who have business setup in the same state, for the delivery of goods from other states
for e:g:
Our company operates from Punjab, GTA unregistered person has also business setup in PUNJAB, Supplier of our goods: from Delhi or any other state, GTA servicer provider delivered goods from Delhi to Punjab.
Mam, I have one more doubt, I’m registered person in Karnataka someone provides GTA Service to our company from other states. We need to pay GST under RCM. My question is In Case Of GTA service provider is not registered under GST we need pay GST as IGST Or CGST & SGST? If register under GST What We Can Do?
When is IGST under RCM applicable(Give Me some examples)?
It depends on the place of supply whether IGST is applicable or CGST & SGST.
The place of supply of services by way of transportation of goods to–
(a) a registered person shall be the location of such person
(b) a person other than a registered person shall be the location at which such goods are handed over for their transportation.
In your case, IGST will be applicable.
Sir,
Thanks for your clarification regarding my previous doubt. Now I have another doubt we are providing works contract to state govt entity as per GST law output tax shall be paid by us but govt paid us after deducting GSTDS how to deal with it.
Dear Sir,
I have one question in my mind, as I am a manpower provider and paying 18 % GST, but not getting any benefit, while client is not doing our payment on time, why they don’t submit their GST directly, as they are getting refund and if manpower supplier not paying GST on time he has to pay heavy penalty.
I will be waiting for the quick response.
Thanks and regard
Tara Chandra
Sir,
My query relating to Works Contract, We are providing various contracts services to various persons and also we are the main contractors, giving some contracts to subcontractors they are unregistered is there any requirement for paying GST under RCM basis. we are registered GST holders. please kindly provide how to deal with these sub contacts.
Supplies from unregistered subcontractors would fall under RCM scope. But RCM on such transaction is deferred as of now so currently, no GST is applicable.
Thank you sir,
Dear sir
I have availed (taken) wrong IGST RCM Credit Rs.2500/- in the month of April 2018. Please give suggestion How to correct it in May 2018 GSTR 3B by making cash payment through IGST RCM with interest is possible.
It is better to pay the wrong ITC taken now to prevent any future penal consequences.
How?
Though IGST RCM Cash Payment or Regular IGST Cash payment with interest.
The challan is same for both RCM tax and normal tax.
Sir,
We run a Reliance Petrol Pump. Fright on HSD and Motor Spirit ( Petrol ) paid by us and GTA company 9 who hire truck from another transporter ) charge GST and comment on freight bill that GST paid by the recipient. Can We liable for paid GST on freight under RCM and claim ITC ( Goods not covered under GST).
If we paid GST than Can we claim ITC and apply same for the refund.
Request for Guide. Thanks
which type of RCM (CGST-SGST or IGST) on supply from Delhi to Uttarakhand?
As service provider is at Delhi and service recipient is registered under another state so CGST-SGST will be applicable.
And which type would be the RCM @5% payable on Freight for Transport Service from Tamil Nadu to Uttar Pradesh?
Dear Chanchal,
Lots of confusion in RCM…..!
Have Received Goods through Registered Transport and Paid Freight of Rs.10000/-
My request is to provide all the related accounting entries- right from paying freight to claiming ITC. (In Detail)
That would be really helpful
Let’s assume the transporter is registered in another state.
Freight Inwards A/c Dr. 10,000
ITC of Reverse Charge (IGST) A/c Dr. 500
To Bank A/c 10,000
To GST payable on Reverse Charge (IGST) A/c 500
ITC of Reverse Charge (IGST) A/c Dr. 500
To ITC of IGST A/c 500
NOTE: This entry is only for simplification of taking ITC. You may not pass this as well.
GST payable on Reverse Charge (IGST) A/c 500
To Bank A/c 500
IGST/CGST/SGST/ payable A/c Dr. 500
To ITC of IGST A/c 500
Sir, please explain bout RCM in GTA services. I am registered person in Haryana and sell my goods to Rajasthan (F.o.r) and hire registered GTA & paid the freight. Now, what should be the consequences? Is RCM @5% applicable or otherwise? Whether non-registration of GTA makes any difference.
Yes, RCM is applicable in your case. If GTA is unregistered then provisions as applicable in case of supplies from unregistered person applies.
Please clarify, whether RCM is applicable today on expenses other than Freight and advocate fees e.g. travelling expenses, etc.
Service notified under given pdf is only covered under RCM. http://www.cbec.gov.in/resources//htdocs-cbec/gst/list-of-services-under-reverse-charge-2.pdf
We are registered under GST based in M.P. We purchased goods from Maharashtra and send to Tamilnadu on FOR basis (Freight paid by us). through registered GTA of Maharashtra. My question is that whether we have to pay IGST or CGST+SGST under reverse charge mechanism.
IGST would be applicable.
Hi,
I am an NRI and non-citizen of India, having commercial rental property in India. I don’t have the residence in India. I have income tax department PAN and India bank NRO account, both with my foreign address. I pay income tax. This year my total rent is going to exceed the threshold for GST.
I was told that I don’t need to register for GST but Tenant should pay the GST on rent using RCM. Is this correct?
Thanks.
SM.
Yes, as the service provider is in non-taxable territory, so RCM will be applicable and tenant need to pay the tax.
Thank you for the clarification.
1) How to make sure that the GST on rent is paid by the tenant in this case. Is there any document I should ask them showing the tax paid detail for reference?
2) Please let me know how to respond to someone saying, “Since the rental building is in India (taxable territory), its the responsibility of the landlord to collect GST on rent and pay it to the GST department.”
Dear Chanchal jee
I am a trader of goods having 5% GST rate. I paid to transport charges on regular basis on the purchase of goods above Rs. 5000.00 to different unregistered persons or a single person up to Rs. 15,00,000.00 and deduct TDS. Liable for Payment of RCM or not?
I am doing cloth business & share trading in equities & future options & had always shown profit or loss as bussiness income or business loss last 13 years & had always shown expenses such as stt, turn over tax, other charges, brokerage seperate in profit & loss a/c, Now as I am registered in Gst with my legal name & Pan no, I have given my GSTIN to my broker & he ( my broker ) have filled his GSTR1 in which he had shown my bills. & I can check them in my GSTR2
So as I am always showing share profit & loss as business income or loss & showing the charges & brokerage separately in my P&L a/c, can I take the input GST credit of this share trading business & adjust against my output Gst of other business of same GSTIN ( please note that I am not a stock broker & doing trading of shares)
Thanks
Regards
Rajesh Jain
Since both the business verticals are different, you cannot adjust ITC of share trading business with output tax liability of clothing business.
We paid Rs.10000/- to a transport company (unregistered) against Freight Charges. We paid Rs.500/- (5%) of GST under RCM and deposit it in the government account. We shown this figure in Form GSTR 3B [3.1(d) inward supply (liable to reverse charges)] and also claimed an ITC of same in Form GSTR 3B [4(A)(3) Inward supplies liable to reverse charge (other than 1 & 2 above).
We are doing right or not?
one more question is that there are several freight charges paid during the month. We are generating RCM invoice to each transporter separate. What should I do in this case?
The treatment done by you is correct in case the transport company is GTA. RCM invoice would be generated separately only for each transporter.
What if Cash Payment made in ISD Registrations? What documents required to file the refund application?
Please clarify your query.
We are a Warehouse service provider registered under GST and charge GST under FCM (Forward Charge Method). We also provide GTA service to customers and follow the RCM (Reverse Charge Method). Do we need to take separate registration for GTA and are we correct in following the RCM for GTA services?
Request you to suggest.
Thanks, & regard,
Varun Monga
If you treat GTA as a different business vertical then you need to take different registration for each type of services you provide.
Hello Chanchal Agrawal,
What is current scenario after 31st March 2018 for RCM on GTA? What about local transportation (NON-GTA / unregistered dealer ) where we have to pay anywhere between 500 to 2000 rupees per month for local transport who is unregistered only for services to transport to and fro from our workshop. Do we need to pay RCM on this amount as in few cases the amount exceeds 750 rupees?
RCM provision will only attract on services provided by GTA, in all other cases, if the service provider is registered then only tax liability will arise.
Hi,
We have input tax carried forward from Jan Now I got an invoice from our lawyer 100000/- do I need to pay tax for this or I can adjust from the input carried forward. Please do let me the what I have to do in this case. Awaiting for your reply, please
G.S.T. on lawyer fees is to be paid under reverse charge mechanism by the recipient. R.C.M. liability can only be settled in cash not through ITC.
We have a manufacturing unit and we produce nil rated products. We pay CGST & SGST on the purchase of packing material and other repair goods.
Can we claim ITC on above-said goods?
We have also paid RCM for legal and professional services. Can we claim ITC for that?
1. As these are not covered by section 17(5) of CGST act, so you can claim ITC for that but as such you are producing goods attracting nil tax rate so you can claim the refund of ITC.
2. Yes, you can claim it, procedure same as above.
I have a query that can i claim input tax paid at the time of purchase on the month of April-2018 can set off without tax liability for the month of April-2018 and one more query that up to where RCM on expenses extended is RCM on GTA also extended and is liable to pay GST on purchase made from unregistered dealer in case invoice value exceeds 5000.
Hello Madam,
I am trying to upload GSTR-1 in Q basis but both of problem in my form 3B month of March 18.
1.purchase invoice advocate fee paid but no RCM paid in a transaction in the same month. Please guide what to do?
Pay RCM on advocate fee now and claim ITC in the GSTR-3B you file next. GSTR-1 would contain details of your outward supplies only.
IS GST applicable on advance payment to a lawyer?
Yes as the only advance paid for goods are not attract GST till next notification so advance paid for services will attract GST.
PURCHASE BILL FOR THE MONTH OF JULY, AUGUST, AND SEPTEMBER NOT ENTERED IN THE BOOKS TILL NOW. PLZ GUIDE WHAT TO DO? WHEN WE CAN CLAIM ITC OF THESE BILLS AND IN WHICH MONTH WE CAN ENTER THESE BILLS.
PLZZ REPLY???
As far as the ITC is concerned, you can take it in the next GSTR-3B you will be filing. GSTR-2 is deferred as of now. Ensure entering correct details whenever GSTR-2 is opened by the portal.
Is RCM paid claimed ITC in the same month or next month?
Travelling expense -international for the business purpose whether ITC available or not?
Yes, you can claim ITC in the same month.
Kindly confirm we have to pay GST under RCM to GTA or not as on date.
GTA services are covered under RCM provisions and you have to pay tax under RCM.