Reverse charge mechanism u/s 9(4) of CGST Act suspended till 31.03.2018

CBEC has issued Notification No. 38/2017 – Central Tax (Rate) dated 13.10.2017 providing exemption to registered persons from paying CGST under reverse charge on supply of goods or services from unregistered person to registered person till 31.03.2018.

The Central Government vide Notification No. 38/2017 – Central Tax (Rate) dated 13th October, 2017, has amended Notification No. 8/2017 – Central Tax (Rate) dated 28th June, 2017 by omitting proviso under Paragraph 1 which deals with the exemption limit of Rs. 5000 per day available to the registered person on intra-State procurement of goods or services from any or all unregistered suppliers. Now, exemption shall be available to all the registered persons till March 31, 2018 without any limit in case of supply procured from unregistered supplier. Inter-State supplies received from unregistered supplier is also exempt under corresponding notification issued under IGST Act.

Therefore, any registered person procuring taxable goods/services from unregistered suppliers, shall not be required to pay CGST under reverse charge mechanism U/s 9(4) of CGST Act, 2017 till March 31, 2018 with effect from 13th Oct, 2017.

In case of goods, where tax is payable on reverse charge basis, the time of supply shall be the earliest of the following :

• Date of Receipt of Goods

• Date of payment to unregistered supplier

• Immediately following 30 days from the date of issue of invoice or any other document

Example: if goods were received prior to 13th Oct, 2017 then liability to pay reverse charges u/s 9(4) arises.

In case of services, where tax is payable on reverse charge basis, the time of supply shall be the earliest of the following :

• Date of payment to unregistered supplier

• Immediately following 60 days from the date of issue of invoice or any other document

Example: if service was obtained in the month of September for which invoice was issued on 10th Sep, 2017 and payment to an unregister supplier is not made till 13th Oct, 2017 then there would not be any reverse charge liability on such transactions.

Liability u/s 9(3) is not affected by this notification and the same must continue to be discharged.

Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise and Customs

Notification No. 38/2017–Central Tax (Rate)

New Delhi, the 13th October, 2017

G.S.R. 1262(E).– In exercise of the powers conferred by sub-section (1) of section 11 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on being satisfied that it is necessary in the public interest so to do, on the recommendations of the Council, hereby makes the following amendment in the notification of the Government of India, in the Ministry of Finance (Department of Revenue), No.8/2017- Central Tax (Rate), dated the 28th June, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 680(E), dated the 28th June, 2017, namely:-

In the said notification, the proviso under Paragraph 1 shall be omitted.

2. The exemption contained in the notification No. 8/2017-Central Tax (Rate) dated the 28th June, 2017 as amended by this notification shall apply to all registered persons till the 31st day of March, 2018.

[F. No.349/74/2017-GST (Pt.)]

(Ruchi Bisht)
Under Secretary to the Government of India

Note: – The principal notification No.8/2017-Central Tax (Rate), dated the 28th June, 2017 was published in the Gazette of India, Extraordinary, Part II, Section 3, Subsection (i) vide number G.S.R. 680 (E), dated the 28th June, 2017.