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Reverse charge mechanism under GST - Reverse gear of tax burden

Goods and Services Tax - GST - By: - Lakhvinder Singh - Dated:- 14-7-2017 Last Replied Date:- 21-7-2017 - A. Introductory provisions of reverse charge under GST Law. • In terms of section 9(1) of Central Goods and Services Tax Act, 2017, Central Goods and Services Tax (CGST) shall be levied on all intra-state supplies of goods & services or both except the supply of alcoholic liquor for human consumption. • In terms of section 5(1) of Integrated Goods and Services Tax Act, 2017, In .....

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ued the list of goods vide Notification No. 4/2017 - Central Tax (Rate) dated 28th June, 2017 & 4/2017 - Integrated Tax (Rate) dated 28th June, 2017 & services vide Notification No. 13/ 2017- Central Tax (Rate) dated 28th June, 2017 & 10/2017- Integrated Tax (Rate) dated 28th June, 2017 on which reverse charge will be applicable. • In addition to above, if a registered person receives goods/ services having value more than ₹ 5000/- per day from unregistered persons (may be .....

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vices Tax Act, 2017: Reverse charge means the liability to pay tax by the recipient of the supply of the 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 sub-section (4) of section 5 of the Integrated Goods & Services Tax Act. • Reverse charge is only a mode of collection of CGST/SGST or IGST on Supplies of goods and services where the service receiver (may be wholly or .....

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t of revenue to the Government. • Collection of GST on all supplies even supplied by unregistered person. • Administrative Convenience to the department. D. Services covered under reverse charge (Notification No. 13/ 2017- Central Tax (Rate) dated 28th June, 2017 & 10/2017- Integrated Tax (Rate) dated 28th June, 2017) Import of Services - (Not Covered in CGST LAW) • Taxable services provided by any person located in non-taxable territory. Services should be received by any per .....

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law for the time being in force in any part of India. c) Any co-operative society established by or under any law. d) Any dealer of excisable goods, who is registered under the Central Excise Act, 1944 or the rules made there under. e) Any Body-corporate established, by or under any law; or f) Any partnership firm whether registered or not under any law including association of persons g) Casual Taxable Person Person who pays the freight shall be treated as receiver of service. Legal service Se .....

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territory. Liability of service receiver - 100% Services of Arbitral Tribunal to non business entity are exempted. Services of Arbitral Tribunal to business entities having turnover less than ₹ 20 lacs in previous year are exempt. Sponsorship Services Services provided by way of sponsorship by any person. Service receiver should be any body corporate or partnership firm in taxable territory. Body Corporate means as same in Section 2(11) of Companies Act, 2013. Liability of service receive .....

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er -Company or body corporate - liable for 100 % Services by An Insurance Agent Services provided by an insurance agent. • Service receiver is any person carrying on insurance business. Liability of service receiver - 100% Services by Recovery Agent Services provided by a Recovery Agent. Service receiver is Banking Company or Financial Institution or a non banking financial company. Liability of service receiver - 100% Goods Transportation up to Custom Station (Not Covered in CGST LAW) Serv .....

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se or enjoyment of a copyright covered under the Copyright Act, 1957 relating to original literary, dramatic, musical or artistic works. Service Receiver should be publisher, Music Company, producer. Liability of service receiver - 100% E. Goods covered under reverse charge (Notification No. 4/2017 - Central Tax (Rate) dated 28th June, 2017 & 4/2017 - Integrated Tax (Rate) dated 28th June, 2017) S. No. Goods Description Supplier Recipient 1. Cashew Nuts, Not Shelled or peeled Agriculturist A .....

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provided by mutual fund agent or distributor to a mutual fund or asset management company. • To be provided by a selling or marketing agent of lottery tickets to a lottery distributor or selling agent. • Renting of motor vehicle except through e-commerce operators. • Supply of manpower or security service. • Work Contract Service G. Issues Is the reverse charge mechanism applicable only to services? - No, reverse charge applies to supplies of both goods and services. Composit .....

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le on reverse charge basis, the time of supply is appointed to be the earliest of (a) date of receipt of goods, (b) date of payment (c) 30 days from the date of issue of invoice by the supplier. If for any reason, these three dates cannot be determined then the time of supply will be the date of recording the supply in the books of the recipient. • Time of Supply of Services under Reverse Charge - Where tax is payable on reverse charge basis, the time of supply is appointed to be the earlie .....

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find buyers. Who will purchase goods from them? (Only limit is 5000/- per day.) - Reply By Maninder Singh - The Reply = Sir, As per section 5(4) of IGST Act, if a registered person purchase any goods or service exceeding ₹ 5000/- per day from any or all unregistered supplier, he is liable to pay IGST on reverse charge basis. However when we have a look on the section 24 of CGST Act, it says that person making any inter-state taxable supply, will have to take registration mandatory, it mean .....

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rsement of these expenses to employees or these expenses are covered under schedule III. Requesting you to please clarify this also. - Reply By KASTURI SETHI - The Reply = Sh.Lakhavinder Singh Ji, Sir, Nice article. Gaager Mein Saager hai. One more reason for RCM is to shift the burden of tax to body corporate from individual/Proprietorship, partnership firm, One Person Company etc. Those persons who will supply goods or services to body corporate will also forgo threshold exemption inasmuch as .....

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istered purchase is ₹ 11500/- in a day. Is it liable to pay RCM.I seen some youtube video , they are telling that ₹ 5000/- per day from a single person not in gross or in total. further I purchase ₹ 6000/- then may it be taxable in whole under RCM. - Reply By Rohit Bhura - The Reply = Sir, under point D you have written Taxable territory - Whole of India except Jammu & KashmirBut as GST is applicable to J & K also so the taxable territory should be whole of india - Repl .....

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By Lakhvinder Singh - The Reply = Dear Maninder singh ji regarding your query on expenses incurred by employees for official purpose, like conveyance, food and beverages, telephone or internet, as per my opinion GST not applicable on these reimbursements by employer as the main transaction is between unregistered persons(employee & unregistered supplier) and these reimbursements are as per employment terms. - Reply By Lakhvinder Singh - The Reply = Kasturi sethi sir you have rightly said tha .....

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= Dear Sir,Thanks for giving clarifications on the query. Request you to please share your opinion on reverse charge in case of interstate supply where registration is mandatory for a person making interstate supply. - Reply By swaminathan venkataraman - The Reply = IMPROMPTUThe term 'reverse charge', as explained, calls for an elucidation. To be precise, the point not made quite clear is this: Whether the recipient acts only as a collecting agent of the levy; that is, the burden has to .....

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emember right, -as held out by the SC in a leading case,- the primary liability is that of the supplier . That is, strictly speaking, as per the law, he is the principal debtor , and as such, is liable to pay the tax . Even so, it is invariably taken for granted, rightly or wrongly so, that the supplier is , in the normal course, entitled to pass on the burden to the recipient. That, in one s independent conviction, which is recalled to find support in observations of courts in certain decided c .....

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blic domain , for useful guidance. - Reply By swaminathan venkataraman - The Reply = WRT - Taxable territory -Whole of India except Jammu & Kashmir There is another aspect which has been brought out and shared on Facebook / Linked in, intended for deliberation by eminent experts. That is on the point of doubt in one s mind, -whether it is amply clear that the service tax jurisdiction is limited to or extends beyond the territorial waters of India (i.e. 12 nautical miles ) . For comparison, n .....

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ve to make for RCM purchase of business expense say housekeeping exp. in our accounts. - Reply By Raman Singla - The Reply = Sir,U are right ,govt make RCM to avoid the leakage of tax.I think it is only the matter of book keeping.I deals in scrap where scrap only prefer cash. They sell in cash.Earlier we were buying scrap by showing them first party purchase and sell it the party and submit the tax to the govt. that we charge to the party.Same thing is now..we will charge to party and pay to gov .....

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ingh ji very nice article.Sir I have query i.e. does advance payment to FOREIGN VENDOR for import of goods, liable to IGST under RCM as the foreign vendor is unregistered dealer as per GST Act ?Further if we pay IGST on RCM basis on payment of advance, again the same will be taxed at the time of import when the BILL OF ENTRY will be filed, which implies double taxation.Sir please clarify this issue.Thanks in advance. - Reply By Gautam Kumar Bera - The Reply = ALL UNREGISTERED DEALER:-Suppose if .....

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itemsPlease discuss - Reply By KASTURI SETHI - The Reply = It cannot be composite supply. All HSN codes available on various sites including Board's site. - Reply By abhishek ghai - The Reply = Respected Sir, Request you to answer the following queries- 1. Since RCM has been specified in case of goods also, please tell in what circumstances will the Supplies from Unregistered person to Registered person be leviable to IGST as per Sec 5(4) of IGST Act. Because as per Sec 24 of CGST Act speci .....

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