Yesterday Central Government had come up with a very important notification regarding CGST along with other notifications. It provides an exemption to the small miscellaneous transactions from unregistered persons. But obviously there’re some conditions for it. So will see what are the things needs to be taken care of to avail this exemption. Now, sit back, relax and enjoy the article.

First, lets decode the content of the notification:

√ Central Government

√ on the recommendations of the Council

√ exempts intra-State supplies of goods or services or both

√ received by a registered person

√ from any supplier, who is not registered

√ from the whole of the central tax leviable thereon

√ under sub-section (4) of section 9 of the CGST Act.

Provided,

  • said exemption shall not be applicable
  • where 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
  • exceeds five thousand rupees in a day

So things to keep it in mind to avail the exemption is,

A) The supply should be intra state supply (within the state)

B) Can be for goods as well as services or both

C) The supply should be received by the registered person

D) Supply should be received from an unregistered dealer only

E) This notification exempts only CGST, SGST portion of any intra state supply is not covered in this notification.

F) The notification is only providing RCM exemption for the purchase from unregistered dealer, not any other RCM cases. So those RCM cases are not covered, which attract RCM by the nature of the supply, rather than the nature of the supplier.

G) Exemption is not available if any single person receives bunch of bills total value of those bills is more than 5000/- per day, even if the bills are received from different persons.

Example:-

Mr. X  purchased following items from unregistered dealer, all are dated 01.07.2017 as under:

1st bill – From Ram: Stationery = 2000/-

2nd bill – From Shyam:Lunch = 1000/-

3rd bill – From Madhu : Books = 3000/-

In this case, The bills of Mr. X will not get covered under this notification as aggregate value of all supplies exceeds 5000/- on a single date (01.07.2017)

Exemption would have been available if,:

1) Bill dates are different (So that it will come under 5000/- day limit, say bill date of Ram is 02.07.2017)

2) Any of the bills are 1000/- less than the mentioned value(Say Bill of Madhu is Rs 2000/-

3) If the one of the bills in the same of other person (say, one of the bill is in the name of Mr. Y)

Hence, while this notification is relay welcome move from the Govt. but, one needs to take care of the above issues to avail the exemption under this notification.

Here is the link to the notification.  [Notification No.8/2017-Central Tax (Rate)]

(Author ‘Pralay Chakraborty’ is a Cost Accountant & GST Professional and can be reached at 9705941371, cp171185@gmail.com)

Disclaimer:  The contents of this document are solely for informational purpose. It does not constitute professional advice or a formal recommendation. While due care has been taken in preparing this document, the existence of mistakes and omissions herein is not ruled out. The author does not accept any liabilities for any loss or damage of any kind arising out of any inaccurate or incomplete information in this document nor for any actions taken in reliance thereon. No part of this document should be distributed or copied without express written permission of the author.

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12 responses to “CGST update: Exemption from reverse charge up to Rs 5000 per day”

  1. Jitendra says:

    If we receive supply from a registered person Rs. 10000/- and same day received supply from unregistered persons Rs. 5000/- , So the supply from URD Rs. 5000/- will be exempted from RCM? As aggregated amount of he supply on a day exceeding Rs. 5000/-

  2. Viplav Dudhia says:

    Hi we have a retainer Staff who is given around 18000 per month will reverse charge be applicable on same ?

  3. Debabrata Roy says:

    is it possible to measure daily receipt of service or goods from unregistered supplier for 5000 per day thresehold?/

    • Pranav sheth says:

      if purchase or serivce rec. from un register person per day Rs. 3000/- on weekly basis. i.e. on whole month we are rec. total Rs. 12000/- services from un registered person should it be exempt or whether it wili cover under exemption limit Rs. 5000/- per day. &

      please give us advice.

      Thanking you,

      Regards

      Pranav sheth

  4. Himanshu says:

    How will SGST be treated in this scenario. Please explain

  5. srinivas says:

    we need clarification on RCM on Rent, freight charges, brokerage and commission.
    Our auditors saying these are exempted from RCM because of our sales are exempted under GST. Please clarify us.

  6. Amit Kumar says:

    We are Web Service Provider and we have many expenses as like Sale Promotion, Business promotion, Staff welfare or etc.

    Please advice there is RCM applicable.

  7. Devinder Singh Rana says:

    if a unregistered person (Landlord) provide a renting of immovable property to registered person (tenant) i.e. Company etc.within a state (intra State) for whole month. Actual rent for month Rs 9,000.
    So how we can use the exemption of Rs 5000 per day ?

  8. DEEPA says:

    SO THE NUMBER OF DAYS WOULD BE TOTAL DAYS (30 DAYS) OR WORKING DAYS (20 DAYS) IN A MONTH?

  9. HImanshu Dhingra says:

    How come you concluded that CGST and SGST both are exempt as the notification speak about Central Tax only

    • Pralay Chakraborty says:

      I feel, you read it in different way. it is written,
      “This notification exempts only CGST, SGST portion of any intra state supply is not covered in this notification”.
      Means, It only exempts CGST ; SGST is not covered in this notification.

      Hope it helps!
      Best,
      Pralay Chakraborty

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