Reverse Charge under GST may be defined as the mechanism where the recipient of goods or services is liable to pay GST to the Government for the supply of goods or services or both in the place of supplier of such goods or services. In the normal mechanism of the GST, Supplier of goods or services is liable to collect the GST from the recipient and deposit it to the Government. Recipient of goods or services is liable to pay GST under reverse charge due to charging section 9(3) of CGST Act
As per this section of the Act, it is clear that the person who liable to pay GST under reverse charge mechanism is compulsory to get registered himself under GST. The threshold limit of Rs. 10/20 Lacs is not applicable on these types of taxpayers.
[Notification No. 4/2017-Central Tax (Rate), dated the 28th June, 2017, Notification No. 13/2017- Central Tax (Rate), dated the 28th June, 2017, Notification No. 22/2017 – Central Tax (Rate) dated the 22nd August, 2017, Notification No. 33/2017- Central Tax (Rate) Dated: 13th October, 2017, Notification No. 36/2017-Central Tax (Rate) dated 13th October, 2017, Notification No. 43/2017-Central Tax(Rate) dated 14th November, 2017, Notification No. 11/2018-Central Tax (Rate) Dated: 28/05/2018]
|Tariff item, sub-heading, heading or Chapter||Description of
supply of Goods
|Recipient of Goods|
|1||0801||Cashew nuts, not shelled or peeled||Agriculturist||Any registered person|
|2||1404 90 10||Bidi wrapper leaves (tendu)||Agriculturist||Any registered person|
|3||2401||Tobacco leaves||Agriculturist||Any registered person|
|4||5004 to 5006||Silk yarn||Any person who manufactures silk yarn from raw silk or silk worm cocoons for
supply of silk yarn
|Any registered person|
|4A||5201||Raw cotton||Agriculturist||Any registered person.|
|5||–||Supply of lottery||State Government, Union Territory or any local authority||Lottery distributor or
Used vehicles, seized and confiscated goods, old and used goods, waste and scrap
Central Government, State Government, Union
|Any registered person|
|7.||Any Chapter||Priority Sector Lending Certificate||Any registered
[Notification No.13/2017-Central Tax(Rate) Dated 28-06-2017, Notification No. 22/2017- Central Tax (Rate) dated-22nd August, 2017, Notification No. 33/2017-Central Tax(Rate) Dated 13-10-2017 & vide Notification No. 03/2018 Dated 25th Jan 2018 – Central Tax (Rate)]
|Serial No.||Description of Services||Supplier of Services||Recipient of Services|
|1.||Supply of Services by Goods Transport Agency (GTA) who has not paid GST at the rate 6% to:- (a) Factory (b) Any registered society (c) Any co-operative society (d) any registered taxpayer under GST (e) Any Body corporate (f) Any partnership firm, LLP or AOP (g) any casual taxable person||Goods Transport Agency(GTA)||(a) Factory (b) Any registered society (c) Any co-operative society (d) any registered taxpayer under GST (e) Any Body corporate (f)Any partnership firm, LLP or AOP (g) any casual taxable person; located in the taxable territory|
|2.||Supply of Services by an advocate or Senior Advocate to any business entity located in taxable territory by way representational services before the court, tribunal or any other authority||An individual advocate including a senior advocate or firm of advocates||Any business Entity in the taxable territory|
|3.||Services supplied by the arbitral tribunal to a business entity||Arbitral Tribunal||Any business entity in the taxable territory|
|4.||Sponsorship Services||Any person||Any body corporate or partnership firm or LLP in the taxable territory|
|5.||Services by Central Government, State Government, Union Territory or local authority to a business entity excluding:
a) Renting of immovable property
b) Speed Post, Life Insurance, agency services.
c) Services in relation to aircraft or vessel
d) Transport of goods or passengers
|Central Government, State Government, Union Territory or local authority||Any business entity 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 person registered under the Central Goods and Services Tax Act, 2017 (12 of 2017).||Central Government, State Government, Union territory or
|Any person registered under the Central Goods and Services Tax Act, 2017.|
|6.||Director Services to the Company or body corporate||A director of a company or body corporate||The company or body corporate in the taxable territory|
|7.||Insurance Agent Services||An insurance agent||Any person carrying on the insurance business in the taxable territory|
|8.||Recovery Agent Services||Recovery Agent||A banking company or NBFC or a financial institution in the taxable territory|
|9.||Supply of services by an author, music composer, photographer, artist or the like||author, music composer, photographer, artist or the like||Publisher, music company, producer or the like in the taxable territory|
|10.||Supply of services by the members of overseeing committee to Reserve Bank of India||Members of overseeing committee||Reserve Bank of India|
[Notification No. 8/2017-Central Tax (Rate), dated the 28th June, 2017, Notification No. 38/2017- Central Tax (Rate), dated the 13th October, 2017 and Notification No. 10/2018–Central Tax (Rate) Dated: 23rd March, 2018]
It is to be noted that as per Section 9(4), if a registered person has received the goods or services from the unregistered person, then recipient of such goods or services is liable to pay the GST under reverse charge. But after facing too many difficulties by the taxpayers, the GST Council issues notifications in the public interest to exempt the recipient of goods or services who receives the goods or services from the unregistered person. Such Exemption is available to the taxpayers upto 30th June 2018 as per notification no. 10/2018 of Central Tax (Rate).
Important points to be noted:
Further, Central Government vide Notification No. 10/2017-Integrated Tax(Rate), dt. 28-06-2017 has w.e.f 1st July 2017 provided the category of services on which IGST needs to be paid on the reverse charge basis completely (100%) by the recipient of such services.
The list of services as notified under the CGST Act is replicated under IGST Act also. In addition to the same, following two additional services are notified under IGST Act.
|Sl No.||Category of supply of services||Supplier of Service||Recipient of service|
|01||Any service supplied by any person who is located in a non-taxable territory to any person other than non-taxable online recipient.||Any person located in a non-taxable territory.||Any person located in the taxable territory other than non-taxable online recipient.|
|02||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 Sec 2(26) of the Customs Act,1962, located in the taxable territory.|
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