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Home Articles Goods and Services Tax - GST Alok Agarwal Experts This |
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Reverse Charge Under GST |
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Reverse Charge Under GST |
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Reverse charge on specified Goods & Services Section 9(3) of CGST/SGST acts provides that, Government may specify categories of supply of goods or services which shall be paid on reverse charge basis i.e. tax shall be paid by the recipient of such goods or services. In this regards two notifications have been issued providing the list of goods and services, wherein the purchaser/recipient has the liability to pay GST. Goods subject to reverse charge – Notification no. 04/2017 dated 28th June 2017
Services subject to reverse charge- Notification 13/2017 dated 28th June 2017
Reverse Charge on Procurement by Registered Person from Unregistered Person Section 9(4) of CGST/SGST Act provides that in case of procurement of goods or services by a registered person from an unregistered person then the registered person shall pay GST on reverse charge basis as if he is the person liable for paying the tax. This provision of section 9(4) is applicable for all the procurement whether same is for procurement of raw material or any other direct or indirect expenses. Section 9(4) shall come into play if the below conditions are met:
1. If the supply involved exempt goods or services or both this section won't be applicable. Examples: 1. A registered person hire auto rickshaw for commuting from one place to another. Section 9(4) would not be applicable since transportation of passenger by auto rickshaw is exempted services. 2. A registered person stay in a hotel whose room tariff is less than ₹ 1,000. Section 9(4) won't be applicable since services by a hotel having declared tariff less than ₹ 1,000 per day or equivalent is an exempt service. 3. The Section is applicable to intra state taxable supplies only. As per section 24, in case of inter-state taxable supply, registration is mandatory without any turnover limit. So there could not be any taxable supply from unregistered to registered person under reverse charge in case of inter-state. 4. Supplier should be unregistered whether he is liable to registered or not. 5. Recipient should be registered. Exemption to Section 9(4) Vide Notification 08/2017 dated 28/06/2017, reverse charge provisions would not be applicable if the aggregate value of such supplies of goods or service or both received by a registered person from any or all the suppliers, who is or are not registered, does not exceed ₹ 5000 in a day In our view, the above limit of ₹ 5000 is only for taxable supplies by unregistered person. If any exempt supply is procured then such amount shall not be considered for the limit of ₹ 5000. Registration All persons procuring gods/services notified above, on which GST is payable on reverse charge, have to be registered mandatorily as per Section 24 (iii) of CGST/SGST law, irrespective of the threshold. Time of supply for goods under reverse charge In case of reverse charge, the time of supply shall be the earliest of the following dates -
If it is not possible to determine the time of supply under (a), (b) or (c), the time of supply shall be the date of entry in the books of account of the recipient. Time of supply for services under reverse charge In case of reverse charge, the time of supply shall be the earliest of the following dates - (a) The date of payment OR (b) The date immediately after 60 days from the date of issue of invoice by the supplier If it is not possible to determine the time of supply under (a) or (b), the time of supply shall be the date of entry in the books of account of the receiver of service. Input tax credit on reverse charge supplies Tax paid on reverse charge basis will be available for input tax credit if such goods and/or services are used in the course or furtherance of business. The service recipient (i.e., who pays reverse tax) can avail input tax credit Invoice in case of reverse charge As per section 31(3)(f), person discharging GST liability under reverse charge under section 9(3) or 9(4) shall issue an invoice in respect of goods or services or both received by him from the supplier. Further as per 31(3) (g) shall issue a payment voucher at the time of making payment to the supplier.
By: Alok Agarwal - July 6, 2017
Discussions to this article
Dear Sir, Self invoice U/s sec 9 (3) & 9 (4) of GST whether shown in GSTR1 or GSTR-2 ?
Sir, I have 1 principal place of business and 9 other additional place of business in a state, so this 5000 exemption will be combination from all or it will be different for all person seprately. Like 5000 for principal and 5000 for all other place.
Sir, I have paid Tax @5% under RCM on GTA Service Received by me. Whether I am eligible to take ITC of the Tax paid under RCM ?
Sh.Alok Agarwal Ji, Nice article, Sir. Beautifully compiled. One point to add is that ITC under RCM is available subject to cash payment of tax first. This law was also in pre-GST period.
But Sir RCM is also applicable on interstate transaction
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