Satish Vattam & Alok Agarwal
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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.
Article compiles GST reverse charge list of Goods and GST reverse charge list of Services and explains provisions for Reverse Charge on Procurement by Registered Person from Unregistered Person
Goods subject to reverse charge under GST –
Notification No. 4/2017-Central Tax (Rate) dated 28th June 2017
| Description of supply of Goods Supplier of goods | Supplier of Goods | Recipient of supply |
| Cashew nuts, not shelled or peeled | Agriculturist | Any registered person |
| Bidi wrapper leaves (tendu) | Agriculturist | Any registered person |
| Tobacco leaves | Agriculturist | Any registered person |
| Silk yarn | Any person who manufactures silk yarn from raw silk or silk worm cocoons for supply of silk yarn | Any registered person |
| Supply of lottery. | State Government, Union Territory or any local authority | Lottery distributor or selling agent |
Services subject to reverse charge under GST
– Notification 13/2017 dated 28th June 2017
| Category of Supply of Services | Supplier of service | Recipient of Service |
| Supply of Services by a goods transport agency (GTA) | Goods Transport Agency (GTA) | (a) Any factory registered under or governed by the Factories Act, 1948(63 of 1948); or (b) any society registered under the Societies Registration Act, 1860 (21 of 1860) or under any other law for the time being in force in any part of India; or (c) any co-operative society established by or under any law; or (d) any person registered under the Central Goods and Services Tax Act or the Integrated Goods and Services Tax Act or the State Goods and Services Tax Act or the 2 Central Goods and Services Tax Act or the Integrated Goods and Services Tax Act or the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act; or (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; or (g) any casual taxable person. Union Territory Goods and Services Tax Act; or (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; or (g) any casual taxable person; located in the taxable territory |
| Services supplied by an individual advocate including a senior advocate by way of representational services before any court, tribunal or authority by way of legal services, to a business entity. | An individual advocate including a senior advocate or firm of advocates | Any business entity located in the taxable territory |
| Services supplied by an arbitral tribunal to a business entity. | An arbitral tribunal | Any business entity located in the taxable territory |
| Services provided by way of sponsorship to a body corporate or partnership firm. | Any person | A body corporate or partnership firm located in the taxable territory. |
| 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. |
| 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. |
| 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. |
| Services supplied by a recovery agent to a banking company or a financial institution or a nonbanking financial company. | A recovery agent | A banking company or a financial institution or a non-banking financial company, located in the taxable territory. |
| 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 clause (a) of sub-section (1) of section 13 of the Copyright Act, 1957 relating to original literary, dramatic, musical or artistic works to a publisher, music company, producer
|
Author or music composer, photographer, artist, or the like | Publisher, music company, producer or the like, located in the taxable territory |
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:
- There should be supply.
- Supply should be in respect of taxable goods or services or both.
- Supply must be by unregistered person.
- Supply must be to registered person.
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 Rs. 1,000. Section 9(4) won’t be applicable since services by a hotel having declared tariff less than Rs. 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 Rs. 5000 in a day
In our view, the above limit of Rs. 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 Rs. 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 –
- the date of receipt of goods OR
- the date of payment OR
- the date immediately after 30 days from the date of issue of invoice by the supplier
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.
we purchase agriclture product from farmer then rcm will be apply on us
we purchased agriclture product form farmer .then rcm will apply on us
Hi,
Can we clam ITC on RCM against other CGST Liability in the same month as Payment?
Example: one Invoice raised against URD Supplier in July and few other Invoices raised against Registered Supplier in July 2017. We settle the GST payment on or before Aug 20th. While making the payment, can we utilize the Input Tax credit against RCM with other CGST/SGT Liability and pay only the difference to Govt in the month of Aug 2017? Or Should we wait till Sept 2017 to avail the ITC on RCM?
Appreciate responce from GST experts.
The ITC of rent – a cab services is not available if service is from registered dealer as per Section 17 of CGST Act. Whether we can avail the input tax credit of SGST+IGST if rent a cab service is availed from unregistered dealers by registered person?
SIR I AM A EXPORTER AND I HAVE SHIPPED GOODS WITH GST AND INVOICE MADE WITH C&F.
AND CHA HAS SENT BILL OF AIR FREIGHT WHIS GST THAN WE WILL TAKE THE BILL FOR RCM. OR NOT
we are paying shop rent 6000/-, godown rent 7000/- ,we are liable to pay rcm ? if liable which percent ?
I have two business verticals one is exempted under GST and other is taxable in GST, Whether RCM applicable on both verticals as whole or separately
sir do we have to pay GST as reverse charge on purchase of old machinery from unregistered persons bought for manufacturing purpose.
sir, i have a general store and my turnover is more than 200000 and i have a registered on gst act.but i am not sale on registered dealer only customer who to pay tax and take itc credit.but purchase to registered dealer
plz explation about gst on rcm with section 9(3),9(4) in detail
I have registered dealer at noida. i am purchasing goods from unregistered dealer per day 5000 or more than reverse charge is applicable to me plz reply me soon
I AM REGISTERED IN GST AND I AM PAYING RENT RS. 10000/- PER MONTH CAN I PAY GST 18% IN RCM OR NOT
pay monthly rent for family member for gst rate and pay amount limit under gst
shop rent paid in july 13000 and forget mentioned in GSTR 3b return what should i do now
Dear sir,
As per this article ITC can be availed if it covers under RCM then pls suggest the notification about GTA (Road Transport) when it covers under RCM & we are paying tax on behalf of GTA
Pls send us the details on mail id-
08nishu08@gmail.com
How to make a RCM invoice against URD purchases or URD expenses in that bill buyer & supplier’s number same which is not allowed in GSTR 3(B)
Whether RMC is applicable on freelancer’s services incurred for a month and charged lump-sum 24k?
i want know about reverse charge on indirect expense in gst and what is the gst rate on indirect expense example shop expense, staff salary, godown rent,shop rent
I am registered in GST. my proprietorship firm deals of Ganswa Machine & Mines. Machine Wages And Mines Wages paid by me above 5000/- per labour per month. what my proprietorship firm liable for reverse charge on machine wages and mines wages under GST act. ?
if our sales executive submit their bills for fooding/taxi
hotel etc than we are fall in RCM for all bill. foooding in small dhaba like that. We are a regd co.
While migrating to GST, we have done only for goods, but we had service tax regn also, which was not included. Can we amend now.
I am debiting rent for Rs.20000/- per month for my own company, is it apply RCM? How much GST my company has to pay under RCM for rent?
i am running a PG having tariff Rs. <1000 per day and paying rent of building to the unregistered owner @ Rs.50000/- per month. My questions are:
1. Whether I have to charge GST on my tariff.?
2. Whether I have to pay Reverse charge on the rent paid to the building owner.?
is a manufacturer or trader of exempt goods is liable to register under GST
Sir,
Is supply of agriculture produce by farmer/agriculturist (who is unregistered person) to a person registered under GST liable under Reverse Charge? Will registered person shall pay GST under RCM Sec. 9(4)?
is there any list of supply of goods &/or services which specifically covers RCM?
is there any specific notification for the same?
please guide as soon as possible.
thanks in advance
ऐसा लगता है कि Tax Guru (सिर्फ़) व्यापारियों के हित के लिये सचमुच उपयुक्त है। उपभोक्ता के लाभार्थ इसमें शायद ही कुछ होता हो!!!!!
Thanks for the info.
My curiosity is RCM really required as it leads to zero tax. It only increases the work load. Records and more records.
Your expert views Sir.
Thanking you in advance
warm regards
only income is say 20.5 lk from commercial building rent, living in same place. will this be CGST/ SGST.
2)previously i give invoice for ST, collected and paid the government, now should i opt for reverse charge/ composition scheme.
3)kindly give service category, service heading, service group and service account code for rental from immovable property.
rent recd is less than rs.20lacs p.a…. so whether gst applicable or not
a GTA is exempted from taking registration under GST as per the notification mentioning the suppliers falling under reverse charge….my question is if GTA is an unregistered entity then whether section 9(4) section will be applicable to them?????
Whether section 9(4) is independent of section 9(3)?
Whether reverse charge applicable only to goods and services notified by GST council and supported by notification
Hello Sir plz explain reverse charge invoce format and reverse charge invoice make under sale head ?
What is the logic behind interstate supply of services being made liable for mandatory registration, even when the turn over is below the limit?
What if the supplier has turnover less than 20L Will Reverge Charge still be charged on his service?
Sir, I paid rent 20000 pm the owner is not registered under GST. How I can paid gst on rent paid under reveres charge.
Pls give the list of exps eligible for reverse charge under gst
If we purchased some stationery or other items from a registered dealer, then it wont attracts rcm. is it possible to claim ITC with that bill only? because shop keeper wont upload our GSTIN number of every customer.
If a defence organisation is raising sponsorship for an event , will that fall under reverse charge scheme under GST. If yes, how much tax charges will be applicable?
I have 4 branches in a state. Rs.5000 exempt limit under reverse charge is for 1 branch or all the branches together
what rate of labourcharges(hamalies charges) gst on reverscharges
What if a registered person goes to other state and pay for some services to unregistered person, then he has to pay tax on RCM basis in his state ?
Sir I am registered in GST for my trading business. Apart from trading busines, I gave a property on rent for Rs 7000 per month. Kindly tell me whether i should take separate registration for rent and charge GST from tenant or my ttenant pay my GST under reverse charge ?
Plz rply
I have two Service Tax Registration ( …..ST001 & ….ST002 ) for one PAN & Both registered Address are same , I file the Both’s Service Tax return Saperately, and Now , department provide me only one Provisional ID. for my One Registration ….ST001 ) Now, How can i Migrate in GST for my Second registration (…ST002 ).
Let you Explain me, what can i do..?
I have two Service Tax Registration ( …..ST001 & ….ST001 ) for one PAN & Both registered Address are same , I file the Both’s Service Tax return Saperatly, and Now , department provide me only one Provisional ID. for my One Registration ….ST001 ) Now, How can i Migrate in GST for my Second registration (…ST002 ).
Let you Explain me, what can i do..?
Is it applicable for Pure labour service also
Satish Vattam & Alok Agarwal
good article sir
Thanks for sharing
Regards
Tsudarshan
9848986217
At what rate will recipient of GTA service pay GST on reverse charge mechanism and avail input credit on it ?
Is it mandatory to issue payment voucher against unregistered purchase even if we settle the account by supplying goods to the same unregistered dealer?
very useful, thanks for the efforts