1. Introduction
Generally, the person effecting taxable supplies is liable to pay taxes. However, in case of imports & supply of certain goods or services as may be notified by the Government on the recommendations of the GST Council, the tax shall be paid by the recipient of such goods or services, which is called payment under reverse charge.
The terms “reverse charge” means liability to pay tax by the recipient instead of the supplier of goods or services or both. Reverse charge applies to both goods & services.
As per Section 2(98) of the CGST Act, 2017 “reverse charge” means the liability to pay tax by the recipient of supply of goods or services or both instead of the supplier of such goods or services or both under sub-section (3) or sub-section (4) of section 9 of CGST Act, or under sub-section (3) or sub-section (4) of section 5 of the IGST Act, 2017.
It is mandatory for a person to obtain registration under GST who are liable to pay tax under reverse charge mechanism (RCM), irrespective of turnover & whether supplying taxable goods or service or not. Persons who are not engaged in any business activities will not be required to obtain registration and need not to pay tax under reverse charge mechanism.
Section 9 of CGST Act & Section 5 of ICGST Act, 2017 is the charging section under GST.
| Section | Taxability |
| Section 9 (1) | In the hands of the supplier ( No GST on the supply of alcoholic liquor for human consumption ) – under forward charge |
| Section 9(2) | GST on supply of petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas and aviation turbine fuel (ATF) shall be levied from such date as may be notified by the Government on the recommendations of the GST Council |
| Section 9 (3)/ 9(4) | In the hands of the recipient of goods, services or both under reverse charge mechanism – RCM |
| Section 9(5) | In case of specified services, in the hands of electronic commerce operator |
Wherever a supply is covered under RCM, all other provisions of the CGST Act, 2017 and IGST Act, 2017 as applicable, will apply to the recipient of such goods and / or services, as if the recipient is the “supplier” & liable to pay tax in relation to supply of such goods and / or services.
The scheme of partial reverse charge or joint charge, prevailing under the previous Service tax regime not available in GST regime.
2. KEY ASPECTS OF RCM PROVISION
| Sl. No. | RCM Provision |
| 1 | A supply would be subjected to tax under RCM in the hands of the recipient only if it is a notified supply U/s 9(3) of CGST Act or Section 5(3) of IGST Act. |
| 2 | List of goods covered under Section 9(3) are notified under Notification No. 4/2017-Central Tax (Rate) and services are notified under Notification No. 13/ 2017-Central Tax (Rate), as amended from time to time. |
| 3 | In case of supplies received from unregistered persons, it is taxable under RCM in the hands of registered person U/s 9(4) of CGST Act, only in respect of
(a) ‘class of registered persons’ and (b) ‘categories of goods or services’ as notified under Notification No.07/2019-Central Tax (Rate) Dated 29-03-2019 (W.e.f 1st April 2019). |
| 4 | All taxpayers required to pay tax under reverse charge have to mandatorily obtain registration and the threshold exemption is not applicable on them. |
| 5 | No partial reverse charge will be applicable under GST. 100% tax will be paid by the recipient if reverse charge mechanism applies. |
| 6 | Payment of taxes under Reverse Charge has to be made by cash by debiting electronic cash ledger & cannot be discharge by utilizing input tax credit (ITC). |
| 7 | A supplier cannot take Input Tax Credit of GST paid on goods or services used to make supplies on which the recipient is liable to pay tax under reverse charge. |
| 8 | Input tax credit includes tax paid on reverse charge basis. Once tax is paid under section 9(3) of CGST Act (or 5(3) of IGST Act), character of the payment remains GST and by operation of law, be treated as ‘input tax’. |
| 9 | When any supply of goods or services or both is placed under RCM, the supplier shall not charge any tax from the recipient as this is the settled procedure in law under RCM. |
3. TAXABLE EVENT UNDER REVERSE CHARGE
Reverse charge is applicable when there is a supply and the time of supply is to be determined as per the provision of section 12 or 13 of the CGST Act. Reverse charge is applicable at the time of advance even though actual supply is yet to take place. Rule 52 provides for the issuance of a Payment Voucher in cases where tax is to be paid on reverse charge basis.
4. IMPLICATION OF GOODS RETURN ON WHICH GST PAID UNDER RCM
Refer Circular no. 137/07/2020-GST dated 13th April 2020
There is no provision in CGST Act or Rules regarding reversal of tax paid. The recipient who has paid the tax may apply for refund under section 54 of the CGST Act of GST paid on such advances by filing FORM GST RFD-01 under the category “Refund of excess payment of tax” and shall not issue credit note or revised invoice for which there is no provision.
5. TAX ON IMPORT OF GOODS OR SERVICES OR BOTH
In terms of Section 7 of the IGST Act, 2017, import of goods or services or both shall be treated to be a supply in the course of inter-state trade or commerce. Accordingly, tax under the provisions of IGST Act shall apply on import of goods or services or both.
GST on ocean freight to be paid by importer under Reverse Charge Mechanism (RCM).
6. TIME OF SUPPLY IN CASE OF REVERSE CHARGE MECHANISM (RCM)
| Goods | Services |
| It is earlier of
a) Date of Payment b) 30 days from issue of Invoice c) Date of receipt of goods |
It is earlier of
a) Date of Payment b) 60 days from issue of Invoice
|
However, if it is not possible to determine the time of supply in aforesaid manner, then the time of supply is the date of entry of the transaction in the books of accounts of the recipient of supply.
7. SUPPLIES LIABLE TO TAX UNDER REVERSE CHARGE
There are two types of reverse charge scenario provided in GST Law:
| Section | Nature of Supply |
| Section 9(3) of CGST Act/ 5(3) of IGST Act | Supply of notified goods or services or both |
| Section 9(4) of CGST Act/ 5(4) of IGST Act | Supply of notified goods & services by an un-registered person to specified categories of registered persons |
In case the recipient of notified goods and/or services covered U/s 9(3) is an un-registered person but engaged in business activities, he is required to obtain registration under GST, irrespective of turnover & whether supplying taxable goods or services or not.
8. DIFFERENCE BETWEEN SECTION 9(3) AND 9(4) OF CGST ACT, 2017
Government has notified a list of goods and services along with the type of recipient who shall be liable to pay tax on those supplies covered under reverse charge as per section 9(3). If the goods or the services are not listed or the recipient is not notified, then provision of reverse charge does not apply.
For example, tax in respect of services of advocate availed by a business entity is payable on reverse charge basis. If the recipient is a religious trust, who availed services of an advocate, which is not a business entity, reverse charge provision will not applicable.
Whereas, as per section 9(4), every inward supply received by a registered person from an unregistered person is liable for payment of tax on reverse charge basis by such recipient (This provision was applicable from 1st July 2017 to 12th October 2017 & was kept in abeyance from 13th October 2017 till CGST Amendment Act 2018 came into operation i.e. up to 31st Jan 2019).
With effect from 1st Feb 2019, only “specified classes of registered person” shall be liable to pay tax under RCM U/s 9(4), in respect of supply of “specified categories of goods or services or both” received from un-registered person.
The CBIC vide Notification No.07/2019-Central Tax (Rate) dated 29-03-2019 has notified certain classes of registered person who shall be liable to pay GST under reverse charge U/s 9(4) of CGST Act, 2017 on procurement of certain notified goods/services from un-registered person. At present only goods, services, or both received by a promoter of Real Estate Project from an un-registered person is liable to pay GST under RCM U/s 9(4) of CGST, Act 2017.
9. REVERSER CHARGE UNDER SECTION 9(3) of CGST Act & SECTION 5(3) of IGST Act
The Government may, on the recommendations of the Council, by notification, specify categories of supply of goods or services or both, the tax on which shall be paid on reverse charge basis by the recipient of such goods or services or both and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both.
In exercise of the powers conferred by section 9(3) of the Central Goods and Services Tax Act, 2017, the Central Government has notified certain supply of goods or services or both and certain category of recipient who is liable for payment of GST under RCM.
The list of notified goods & persons are mentioned in Notification No. 4/2017-Central Tax (Rate) Dated 28-06-2017 & list of notified services & persons are mentioned in Notification No. 13/ 2017-Central Tax (Rate) Dated 28-06-2017 as amended from time to time.
10. GOODS COVERED UNDER REVERSE CHARGE [ Section 9(3)]
Notification No. 4/2017-Central Tax (Rate) Dated 28-06-2017 as amended from time to time.
Following goods are notified u/s 9(3) of CGST Act & u/s 5(3) of IGST Act, 2017.
| Sl. No. | Description of supply of goods | Effective Date | Supplier of goods | Recipient of goods |
| 1 | Cashew nuts
(not shelled or peeled) |
01-07-2017 | Agriculturist | Any registered person |
| 2 | Bidi Wrapper leaves (tendu) | 01-07-2017 | Agriculturist | Any registered person |
| 3 | Tobacco leaves | 01-07-2017 | Agriculturist | Any registered person |
| 3A | Following essential oils other than those of citrus fruit namely:
a) Of peppermint (Mentha piperita); b) Of other mints: Spearmint oil (ex-mentha spicata), Water mint-oil (ex-mentha aquatic), Horsemint oil (ex-mentha ylvestries), Bergament oil (ex-mentha citrate).
|
01-10-2021 | Any registered person | Any registered person |
| 4 | Silk yarn
|
01-07-2017 | Any person who
manufactures silk yarn from raw silk or silk worm cocoons for supply of silk yarn |
Any registered person |
| 4A | Raw Cotton | 15-11-2017 | Agriculturist | Any registered person |
| 5 | Supply of Lottery | State Government,
Union Territory or any local authority |
Lottery distributor or selling agent | |
| 6 | Used vehicles, seized and confiscated goods, old and used goods, waste and scrap | 13-10-2017 | Central / State Government, Union territory or a local authority | Any registered person |
| 7 | Priority Sector Lending
Certificate |
28-05-2018 | Any registered person | Any registered person |
| 8 | Metal Scrap | 10-10-2024 | Any unregistered person | Any registered person |
11. SERVICES COVERED UNDER REVERSE CHARGE [ Section 9(3)]
Notification No. 13/2017-Central Tax (Rate) Dated 28-06-2017 as amended from time to time.
Following Services are notified u/s 9(3) of CGST Act & u/s 5(3) of IGST Act, 2017
| Sl. No. | Category of supply of services | Supplier of Service | Recipient of Service |
| 1 | Supply of services by a Goods Transport Agency (GTA), in respect of transportation of goods by road.
Provided that nothing contained in this entry shall apply where,
i) the supplier has taken registration under the CGST Act, 2017 and exercised the option to pay tax on the services of GTA in relation to transport of goods supplied by him under forward charge; and ii) the supplier has issued a tax invoice to the recipient charging Central Tax at the applicable rates and has made a declaration as prescribed in Annexure III on such invoice issued by him.”; ( Ref N.No. 05/2022- CT(R) Dt. 13.07.2022
|
Goods Transport Agency (GTA) | (a) any factory registered under or governed by the Factories Act, 1948; or
(b) any society registered under the Societies Registration Act 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 Act or the IGST Act or the SGST Act or the UTGST 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 Provided that nothing contained in this entry shall apply to services provided by a goods transport agency, by way of transport of goods in a goods carriage by road, to, – (a) a Department or Establishment of the Central Government or State Government or Union territory; or (b) local authority; or (c) Governmental agencies, which has taken registration under the Central Goods and Services Tax Act, 2017 (12 of 2017) only for the purpose of deducting tax under section 51 and not for making a taxable supply of goods or services.
|
| 2 | Services provided by an individual advocate including a senior advocate or firm of advocates by way of legal services, directly or indirectly.
Explanation. – ‘Legal service’ means any service provided in relation to advice, consultancy or assistance in any manner and includes representational services before any Court, Tribunal or Authority. |
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 provided by way of sponsorship to any Body corporate or partnership firm. | Any person | Any Body 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 specified below- (i) services by the Department of Posts and the Ministry of Railways (Indian Railways) 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. |
| 5A | Services supplied by the Central Government excluding the Ministry of Railways (Indian Railways), 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 local authority. | Any person registered under the Central Goods and Services Tax Act, 2017. |
| 5AA | Service by way of renting of residential dwelling to a registered person | Any person | Any registered Person.
|
| 5AB | Service by way of renting of any property other than residential dwelling. | Any unregistered person | Any registered Person. |
| 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/ body corporate to the said company/ body corporate. | A director of a company or a body corporate | The company or a body corporate 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 an author, 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 literary, dramatic, musical or artistic works to a publisher, music company, producer or the like. | Author or music composer, photographer, artist, or the like | Publisher, music company, producer or the like, located in the taxable territory.
(Upto 30th Sept 2019) |
| 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 clause (a) of sub-section (1) of section 13 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.
(W.e.f 1st October 2019, Vide Notification No. 22/2019- Central Tax (Rate ),Dated 30.09.2019. |
| 9A | Supply of services by an author 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 works to a publisher. | Author | Publisher located in the taxable territory.
Provided that nothing contained in this entry shall apply where, – (i) the author has taken registration under the Central Goods and Services Tax Act, 2017 (12 of 2017), and filed a declaration, in the form at Annexure I, within the time limit prescribed therein, with the jurisdictional CGST or SGST commissioner, as the case may be, that he exercises the option to pay central tax on the service specified in column (2), under forward charge in accordance with Section 9 (1) of the Central Goods and Service Tax Act, 2017 under forward charge, and to comply with all the provisions of Central Goods and Service Tax Act, 2017 (12 of 2017) as they apply to a person liable for paying the tax in relation to the supply of any goods or services or both and that he shall not withdraw the said option within a period of 1 year from the date of exercising such option; (ii) the author makes a declaration, as prescribed in Annexure II on the invoice issued by him in Form GST Inv-I to the publisher. |
| 10 | Supply of service by the members of overseeing committee to Reserve Bank of India | Members of the 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 non-banking financial company, 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, – (i)(a) a Department or Establishment of the Central Government or State Government or Union territory; or (b) local authority; or (c) Governmental agencies; which has taken registration under the Central Goods and Services Tax Act, 2017 (12 of 2017) only for the purpose of deducting tax under section 51 of the said Act and not for making a taxable supply of goods or services; or (ii) a registered person paying tax under section 10 of the said Act. |
Any person other than a body corporate | A registered person, located in the taxable territory. |
| 15 | Services provided by way of renting of any motor vehicle designed to carry passengers where the cost of fuel is included in the consideration charged from the service recipient provided to a body corporate. | Any person, other than a body corporate who supplies the services to a body corporate and does not issue an invoice charging central tax at the rate of 6% to the service recipient. | Any body corporate located in the taxable territory.
|
| 16 | Services of lending of securities under Securities Lending Scheme, 1997 (“Scheme”) of 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 authorized 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. |
Effective date of applicability of above RCM provisions are as under:
| Serial No. | Effective date |
| Serial No. 1 to 9 | w.e.f. 1st July 2017 |
| Serial No. 5A | w.e.f. 25th January, 2018 |
| Serial No. 10 | w.e.f 13th October, 2017 |
| Serial No. 11 | w.e.f. 27th July, 2018 |
| Serial No. 12,13 & 14 | w.e.f. 1st Jan, 2019 |
| Serial No. 5B, 5C | w.e.f. 1st April, 2019 |
| Serial No. 9A, 15 & 16 | w.e.f. 1st October, 2019 |
| Serial No. 5AA | w.e.f. 18th July, 2022 |
| Serial No. 5AB | w.e.f. 10th October, 2024 |
In addition to above services, following two additional services has been notified by the Central Government vide Notification No.10/2017-Integrated Tax (Rate) Dated 28-06-2017 wherein whole of the tax shall be payable by the recipient on services U/s 5(3) of IGST Act,2017 on Reverse charge basis.
| 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 Section 2(26) of the Customs Act, 1962, located in the taxable territory. |
Notes :
12. Applicability of RCM on Renting of Motor Vehicle
Refer : a) Notification No. 29/2019-Central Tax (Rate) dated 31.12.2019 b) Circular No. 130/49/2019-GST dated 31-12-2019.
Prior to 30-09-2019, any supplier including body corporates, providing ‘Renting of Motor Vehicle services’, where the cost of fuel forms part of the consideration received, were eligible to pay GST under either of the following options:
1) 5% GST (i.e. 2.5% CGST & SGST each or 5% IGST) with restriction on availment of input tax credit i.e. ITC available in same line of business or
2) 12% GST with no restriction of ITC.
The aforesaid services were taxable under forward charge prior to 1st October 2019 and service providers were eligible to opt for any of the above options for payment of GST. Also, on provision of such services, there was no GST liability under reverse charge mechanism up to 30-09-2019.
Entry No.15, services provided by way of “renting of any motor vehicle designed to carry passengers where the cost of fuel is included in the consideration” has been brought under the ambit of RCM Vide Notification No. 22/2019- Central Tax (Rate) Dated 30th Sept 2019 (Effective from 01-10-2019).
Circular No. 130/49/2019-GST dated 31-12-2019
RCM shall be applicable on the service by way of renting of any motor vehicle designed to carry passengers where the cost of fuel is included in the consideration charged from the service recipient only if the supplier fulfils all the following conditions:
(a) is other than a body corporate;
(b) does not issue an invoice charging GST @12% (6% CGST + 6% SGST) from the service recipient; and
(c) supplies the service to a body corporate.
If all the conditions referred here in above are satisfied, the liability of payment of GST @ 5% has been casted upon the body corporates under RCM, as a recipient of such services.
The above provision can be summarized as under :
| Sl No. | Supplier of Service | Recipient of Service | Rate of Tax | Applicability of RCM |
| 1 | Body corporate (Registered) | Body Corporate | 5%/12% | No |
| 2 | Body corporate
(Un-Registered) |
Body Corporate | —- | No |
| 3 | Non-Body corporate (Registered) | Body Corporate | 12% (Ref Note a) | No |
| 4 | Non-Body corporate (Registered) | Body Corporate | 5% (Ref Note b) / Nil | Yes |
| 5 | Non-Body corporate
(Un-Registered) |
Body Corporate | —- | Yes |
| 6 | Non-Body corporate
(Registered) -If cost of fuel not included in hire charges |
Body Corporate | 18% | No |
Note :
- Where the supplier of the service charges GST @ 12% from the service recipient, the service recipient shall not be liable to pay GST under RCM.
- A service provider who is a non-body corporate, may opt to pay GST @5% under forward charge on services provided to non-body corporate but can not charge 5% GST on service provided to body corporate, since body corporate is liable to pay GST@5% under RCM.
- When any service is placed under RCM, the supplier shall not charge any tax from the service recipient as this is the settled procedure in law under RCM.
- Where a passenger transport vehicle is hired for specific journeys or voyages and not for any particular period of time ( i.e not under the control of recipient) , then the recipient shall not be liable to pay GST under RCM.
13. Supply of goods and services by Indian Railways
Supply of all goods and services by Indian Railways taxable under forward charge w.e.f 20th October 2023 [Notification No. 14/2023-Central Tax (Rate) Dated 19th October 2023]
14. REVERSE CHARGE UNDER SECTION 9(4) of CGST Act & SECTION 5(4) of IGST Act
Supply of taxable goods and/or services or both by an un-registered supplier to a registered person is taxable under reverse charge u/s 9(4) of CGST Act, 2017 and u/s 5(4) of IGST Act, 2017 in the hands of the recipient (if registered).
| Nature of Supply | From 1st July 2017 to 12th October 2017 | From 13th October 2017 to 31st Jan 2019 |
| Supply of taxable goods and/or services or both by an un-registered supplier to registered person | Taxable in the hands of Registered person | Not taxable
(Neither in the hands of supplier nor in the hands of recipient) |
| CGST amendment Act 2018, which came into operation w.e.f 1st Feb 2019 has amended the RCM provision U/s 9(4) of CGST Act . Now only specified classes of registered person shall be liable to pay tax under RCM in respect of supply of specified categories of goods or services or both received from un-registered person. |
Therefore, wherever a supply is covered under RCM, all other provisions of the CGST Act, 2017 and IGST Act, 2017 as applicable, will apply to the recipient of such goods and / or services, as if the recipient is the “supplier” & liable to pay tax in relation to supply of such goods and / or services.
With effect from 1st Feb 2019, the charging provision U/s 9(4) has been amended and Government has been empowered to notify specific classes of registered person who shall be liable to pay tax under Reverse charge on supply received on specified class of goods & services from un-registered person.
15. List of goods or services covered under RCM U/s 9(4) of CGST Act, 2017
In exercise of the powers conferred by section 9(4) of the Central Goods and Services Tax Act, 2017, the Central Government, on the recommendations of the GST Council, has notified that the promoter of a Real Estate Project (registered person), in respect of supply of goods or services or both specified in the Table below, received from an unregistered supplier shall pay tax on reverse charge (RCM) basis as recipient of such goods or services or both.
Notification No.07/2019-Central Tax (Rate) Dated 29-03-2019 (W.e.f 1st April 2019)
| Sl No. | Category of supply of goods and services | Recipient of goods and services |
| 1 | Supply of such goods and services or both [other than services by way of grant of development rights, long term lease of land (against upfront payment in the form of premium, salami, development charges etc.) or FSI (including additional FSI)] which constitute the shortfall from the minimum value of goods or services or both required to be purchased by a promoter for construction of project, in a financial year (or part of the financial year till the date of issuance of completion certificate or first occupation, whichever is earlier) as prescribed in notification No. 11/ 2017- Central Tax (Rate), dated 28th June, 2017, at items (i), (ia), (ib), (ic) and (id) against serial number 3 in the Table, published in Gazette of India vide G.S.R. No. 690, dated 28th June, 2017, as amended. | Promoter |
| 2 | Cement falling in chapter heading 2523 in the first schedule to the Customs Tariff Act, 1975 (51 of 1975) | Promoter |
| 3 | Capital goods falling under any chapter in the first schedule to the Customs Tariff Act, 1975 (51 of 1975) supplied to a promoter for construction of a project on which tax is payable or paid at the rate prescribed for items (i), (ia), (ib), (ic) and (id) against serial number 3 in the Table, in notification No. 11/ 2017- Central Tax (Rate), dated 28th June, 2017, published in Gazette of India vide G.S.R. No. 690, dated 28th June, 2017, as amended. | Promoter |
Explanation. – For the purpose of this notification,
(i) the term “promoter” shall have the same meaning as assigned to it in in clause (zk) of section 2 of the Real Estate (Regulation and Development) Act, 2016 (16 of 2016);
(ii) “project” shall mean a Real Estate Project (REP) or a Residential Real Estate Project (RREP);
(iii) the term “Real Estate Project (REP)”shall have the same meaning as assigned to it in in clause (zn) of section 2 of the Real Estate (Regulation and Development) Act, 2016 (16 of 2016);
(iv) “Residential Real Estate Project (RREP)”shall mean a REP in which the carpet area of the commercial apartments is not more than 15 per cent. Of the total carpet area of all the apartments in the REP.
(v) the term “floor space index (FSI)”shall mean the ratio of a building’s total floor area (gross floor area) to the size of the piece of land upon which it is built.
Note : All houses which meet the definition of affordable houses as decided by GSTC (area 60 sqm in metros / 90 sqm in non- metros and value up to Rs. 45 lakhs) are affordable house.
16. Purchase from un-registered person by developer/builder opting for concessional rate of GST
The GST Council in the 34th meeting held on 19th March, 2019 has taken following decision regarding GST rate on real estate sector.
The new tax rates of 1% (on construction of affordable) and 5% (on other than affordable houses) shall be available subject to following conditions.
(a) Input tax credit shall not be available,
(b) 80% of inputs and input services (other than capital goods, TDR/ JDA, FSI, long term lease (premiums)) shall be purchased from registered persons. On shortfall of purchases from 80%, tax shall be paid by the builder on RCM basis as under:
| Particulars | Rate of GST |
| Cement | 28% |
| Other input/input services | 18% |
(c) The developer/builder shall be liable to GST under Reverse Charge Mechanism on receipt of development rights.
The Author is a Fellow Member of The Institute of Chartered Accountants of India and Fellow Member of The Institute of Cost Accountants of India, working in a Senior position in finance department of Navratna Company. He can be reached at [email protected].
(Article is republished with amendments).
Author Bio
Sir,
When GST payable by RCM in current month, can we take ITC on current month or next month
GST paid under RCM can be availed as ITC in the next month, if it is not covered under Block Credit
what are the RCM provisions for F. Y. 2018-19 Annual Return GSTR- 9 and GSTR- 9C preparation ?
Is reverse charge is applicable on payment of fab charges to unregistered contractors
and also is the gst under reverse charges is applicable on freight payt by us to the transporter if he is a single person owining single vehicle in his name and he is unregistrered under gst
This is not a notified service either under Section 9(3) or 9(4). Hence RCM not applicable.
Freight charges paid to an individual lorry owner, who is not a GTA, the recipient of transport service is not liable to pay GST under RCM. Further this is also covered under exemption list.
Is there RCM applicable for commission paid to foreign agent
Sir can you guide as per applicability of RCM on Labour Contractors as nothing is mentioned. However the article https://taxguru.in/goods-and-service-tax/gst-labour-contractor.html states RCM is applicable.
Services provided by a labour contractor is not a notified service either under Section 9(3) or 9(4) of CGST Act. Hence recepient is not liable to pay GST under RCM.
Is there TDS applicable on telephone bill (Mobile phone ) provided by company to employee..
If yes..then what is rate ???
TDS not applicable
In case if telephone is given for official use then no TDS being it is only a reimbursement of expense to an employee, however, if telephone is given for personal use only then it will be considered as perquisite in the hands of the employee and TDS is required to be deducted accordingly
Thanks Sir for giving information,,
Is there
If one forget to reverse itc for exempt supply under rule 42 whether interest payable and @ what rate even when No cash required to pay due to balance in credit ledger
You just explained the provisions but left behind the impact on the recipients.
Whether the recipient who is not a builder still needs to issue self invoice under section 31 and payment voucher asper rule 52. Pl explain.
Yes, in case of supply covered under RCM, the recipient if registered, shall be required to issue self invoice
Immovable property taken on rental from an unregistered person by registered company whether RCM is applicable. Please suggest
Yes, taxable under RCM under Entry 5AA & 5AB
sir i am a service receiver (company), i receive service (service not cover under RCM) from unregister firm , service value rs.80000.
is i pay gst under rcm or not
If it is not a notified service under Sec 9(3) , it is not taxable under RCM in the hands of recipient in respect of services received from an un-registered person
GST on GTA to be paid @5% under RCM(No ITC). Under forward charge GST Rate is 12% for GTA, with ITC
1 Is a Registered Person, whose, whole supplies are taxable under RCM liable to file GSTR 3B, such as GTA, Recovery Agent of Bank or NBFC ????
2. If Yes, How will the GSTR 3B is file that means, in which column the details of his outward supplies is shown ??
What is The rate of tax applicable in the supply of services under RCM
Rate of GST for services under RCM depends upon nature of service. It may be 5% (e.g renting of motor vehicle) or 18%.
Dear Sir
Can you please update regarding applicability of GST on availing of services by a regd. dealer from Non registered dealer.
Regards
BIBHUDATTA SARANGI
Respected Sir,
I think that Notification No. 36 Central Tax (Rate) dated 13-10-2017 in respect of used vehicle has been not considered and omitted.
Now goods for reverse charge after notification will be as under
1. .cahsew nut
2. bidi
3. tobaco
4. silk yarn
4A. raw cotton
5. supply of lottery
6. used vehicle.
Notification 33/2017-Central Tax,dt. 15-09-2017 Notifying about section 51 of the CGST Act, 2017 for TDS.. it does not deal with RCM
In starting para there is a wrong, that is sec9(3)&sec9(4) you write it as sec9(4)&sec9(5)
At what Rate, Reverse charge on GTA has to be paid? What is the position of ITC for the same