Introduction
Section 9(3) specifies the Government on the recommendation of the council specifies the category of goods and services or both on which tax shall be paid on Reverse Charge basis.
Similarly, section 9(4) specifies that the Government on the recommendation of the council specify the class of the registered person who shall in respect of supply of specified categories of goods or services or both from unregistered supplier shall pay tax on the reverse charge basis as the recipient of the supply.
Page Contents
- Time of Supply in case of Reverse Charge Mechanism under GST
- Payment of Tax and Input Tax Credit in case of Reverse Charge Mechanism under GST
- Compliance in respect of supplies under reverse charge Mechanism under GST
- Supplies of goods under reverse charge Mechanism under GST
- Supply of Services under Reverse Charge Mechanism under GST
Time of Supply in case of Reverse Charge Mechanism under GST
In case of supply of goods, time of supply is earliest of the following: –
1. Date of receipt of goods
2. Date of payment as per books of accounts or the date of debit in its bank account, whichever is earlier
3. The date immediately following thirty days from the date of issue of invoice or similar other document.
In case of supply of service, time of supply shall be earliest of the following: –
1. Date of payment as per books of account or date of debit in bank account, whichever is earlier
2. The date immediately following the sixty days from the date of issue of invoice or the similar other document.
Payment of Tax and Input Tax Credit in case of Reverse Charge Mechanism under GST
> The recipient of specified goods or services or both shall be responsible to pay tax under reverse charge. The recipient cannot use ITC to pay output GST on goods or services under reverse charge and shall be paid in cash only.
> The recipient of goods or the services can avail ITC on the amount paid under reverse charge only if such goods or the services or both are used for business or furtherance of business.
> A composition dealer should pay tax at the normal rates while discharging tax liability under reverse charge. The composition dealer shall be ineligible to claim input tax credit in respect of tax paid.
Compliance in respect of supplies under reverse charge Mechanism under GST
> Every tax invoice as per section 31 has to mention whether the tax in respect of supply in the invoice is payable under reverse charge.
> Any amount payable under reverse charge shall be paid by debiting the electronic cash ledger i.e. the reverse charge tax liability shall be discharged by cash only and after discharging the tax liability, credit of the same can be taken by the recipient, if otherwise eligible.
> Invoice level information in respect of all supplies attracting reverse charge, rate wise, are to be furnished separately in GSTR 1.
Supplies of goods under reverse charge Mechanism under GST
| S. No. | Description of supply of goods | Supplier of goods | Recipient of supply | |
| (1) | (2) | (3) | (4) | |
| 1. | Cashew nuts, not shelled or peeled | Agriculturist | Any registered person | |
| 2. | Bidi wrapper leaves (tendu) |
Agriculturist | Any registered person | |
| 3. | Tobacco leaves | Agriculturist | Any registered person | |
| 4. | Silk yarn | Any person who manufactures silk yarn from raw silk or silk worm cocoons for supply of silk yarn | Any registered person | |
| 4A | Raw Cotton | Agriculturist | Any registered person | |
| 5 | Supply of lottery. | State Government, Union Territory or any local authority |
Lottery distributor or agent. | selling |
| 6 | Used vehicles, seized and confiscated goods, old and used goods, waste and scrap |
Central Government, State Government, Unio n territory or a local authority |
Any registered person | |
| 7 | Priority Sector Lending Certificate | Any registered person | Any registered person |
Supply of Services under Reverse Charge Mechanism under GST
| Sl. No. | Category of supply of services | Supplier of service |
Recipient of service |
| (1) | (2) | (3) | (4) |
| 1 | Supply of Services by a goods transport agency (GTA) in respect of transportation of goods by road | Goods Transport Agency (GTA) except those who are paying tax under forward charge i.e. 12%(CGST 6% and SGST 6%) | (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 CGST/ IGST/ SGST/ UTGST Act; or(e) anybody-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. |
| 2 | Services supplied by an individual advocate including a senior advocate or firm of advocates by way of legal services, directly or indirectly, including where contract for provision of such service has been entered through another advocate or a firm of advocates, or by a firm of advocates, 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. |
| 3 | Services supplied by an arbitral tribunal to a business entity. |
An arbitral tribunal. |
Any business entity located in the taxable territory. |
| 4 | Services provide d by way of sponsorship to anybody corporate or partnership firm. | Any Person |
Anybody corporate or Partnership firm located in the taxable territory. |
| 5 | 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 as specified below-(I) services by the Department of Posts by way of speed post, express parcel post, life insurance, and age ncy services provide d 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. |
| 5A | Services supplied by the Central Government, State Government, Union territory or local authority by way of renting of immovable property to a regist ered person. | Central Government, State Government, Union territory or local authority |
Any person registered under the CGST Act, 2017. |
| 5B | Services supplied by any person by way of transfer of development rights or Floor Space Index (FSI) (including additional FSI) for construction of a project by a promoter | Any person | Promoter |
| 5C | Long term lease of land (30 years or more) by any person against consideration in the form of upfront amount (called as premium, salami, cost, price, development charges or by any other name) and/or periodic rent for construction of a project by a promoter |
Any person | Promoter |
| 6 | 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 corpora te located in the taxable territory. |
| 7
|
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. |
| 8 | Services supplied by a recovery agent to a banking company or a financial institution or a non- banking financial company. | A recovery agent | A banking company or a financial institution or a non-banking financial company, located in the taxable territory. |
| 9 | Supply of services by a 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 dramatic, musical or artistic works to a music company, producer or the like. |
Music composer, photographer, artist, or the like | Music company, producer or the like, located in the taxable territory. |
| 9A | Supply of services by an author 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 works to a publisher. |
Author | Publisher located in the taxable territory Provided that nothing contained in this entry shall apply where, (1) the author is a registered person under GST and filed a declaration, that he exercises the option to pay tax under forward charge and he shall not- withdraw the option within 1 year from the date of exercising option;(2) the author makes a declaration to issue the invoice to the publisher in Form GST Inv-I. |
| 10 | 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. |
| 11 | Services supplied by individual Direct Selling Agents (DSAs) other than a body corporate, partnership or limited liability partnership firm to bank or non-banking financial company (NBFCs) |
Individual Direct Selling Agents (DSAs) other than a body corporate, partnership or limited liability partnership firm |
A banking company or a NBFC, located in the taxable territory |
| 12 | Services provided by business facilitator (BF) to a banking company | Business facilitator (BF) | A banking company, located in the taxable territory |
| 13 | Services provided by an agent of business correspondent (BC) to business correspondent (BC) | An agent of business correspondent (BC) | A business correspondent, located in the taxable territory |
| 14 | Security services (services provided by way of supply of security personnel) provided to a registered person Provided that nothing contained in this entry shall apply to, –(1) The below persons registered only purpose of making TDS u/s 51 but not for supply of goods or services(I) a Department or Establishment of the Central Government or State Government or Union territory;(II) local authority;(III) Governmental agencies.(2) a registered person registered under Composition Scheme u/s 10 |
Any person other than a body corporate | A registered person, located in the taxable territory |
| 15 | Services provided by way of renting of a motor vehicle provided to a body corporate | Any person other than a body corporate, who opts to pay tax at the rate of 5% and he is eligible to claim input tax credit (Persons who are ineligible to claim ITC u/s 17(5) are not covered here) |
Any- body corporate located in the taxable territory |
| 16
|
Services of lending of securities under Securities Lending Scheme, 1997 (“Scheme”) of the Securities and Exchange Board of India (“SEBI”), as amended
|
Lender i.e. a person who deposits the securities registered in his name or in the name of any other person duly authorised on his behalf, with an approved intermediary for the purpose of lending under the Scheme of SEBI | Borrower i.e. a person who borrows the securities under the Scheme through an approved intermediary of SEBI
|
IGST needs to paid as Reverse Charge on the following services: –
| S. No. | Category of Supply of Services | Supplier of service | Recipient of Service |
| 1 | Any service supplied by any person who is located in a non-taxable territory to any person other than nontaxable online recipient. | Any person located in a non-taxa ble territory |
Any person located in the taxable territory other than non-taxable online recipient. |
| 2 | Services supplied by a person located in non- taxable territory by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India. | A person located in a non-taxable territory | Importer, as defined in clause (26) of section 2 of the Customs Act, 1962, located in the taxable territory. |
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