REVERSE CHARGE MECHANISUM UNDER GST




Meaning
Generally, the supplier of Goods & Services is liable to pay GST (supplier collect tax from buyer and pay tax to Govt. on behalf of buyer).
But under RCM GST is paid by recipient of Goods & Services (under RCM buyer directly pay tax to Govt.)
Type of RCM
There are two types of cases for which RCM is mandatory
1.       Covered under section 9(3) of CGST/SGST (UTGST)Act and section 5(3) of IGST Act. supply Goods or Services or both notified by the Government
2.       Covered under section 9(4) of CGST/SGST (UTGST) Act and section 5(4) of IGST Act. Supply of taxable Goods or Services or both by an unregistered supplier to a registered supplier.   
Registration
If RCM is applicable to a person, then GST registration is mandatory. At that time threshold limit of Rs 10/20/40/ lacs will not be applicable to them
ITC
A supplier cannot take ITC of GST paid under RCM .
Compliance under RCM
1.       Every tax invoice, receipt voucher, refund voucher has to mention that GST is payable under RCM
2.       Under RCM, GST shall be paid through cash ledger only
3.       Every registered person has to maintained records of all transaction related to RCM



 Reverse Charge Applicable on  Service Notified U/s 9(3)

                 S no.
Services
Recipient
Goods Transport Agency


Supply of services by a GTA who has not paid GST 12 %.


Exception – service provided by GTA to

-           A department or establishment of the central Govt. or state Govt. or Union territory  or
-          Local authority  or
-          Govt agency , which has taken registration under the CGST only for the purpose of TDS section 51
-           
-          Any factory registered under factory Act
-          Any society registered
-          Any co operative society established by or under any law
-          Any person registered under CGST/SGST/IGST/UTGST
-          Any body corporate established , by or under any law
-          Any partnership firm whether registered or not under any law including AOP
-          Any casual taxable person
Individual Advocate, including senior advocate or firm of advocates.
Service supplied by an Individual Advocate including a senior advocate by way of representational services before any court , tribunal , or any authority , directly or indirectly , to any business entity located in taxable territory
Any business entity located in the taxable territory
An arbitral tribunal
Service supplied by an arbitral tribunal
Any business entity located in the taxable territory
Any person
Service provided by way of sponsorship
Any body corporate or partnership firm located in taxable territory
CG, SG, UTGST OR LOCAL AUTHORITY
Service supplied by CG, SG, UTGST OR LOCAL Authority to a business entity excluding –
-          Renting of immovable property
-          Service by the department of posts by way of speed post, express parcel post , life insurance , and agency service provided to a person other than CG, SG, OR UTGST, OR LOCAL AUTHORITY
-          Service in relation to an aircraft or a vessel , inside or outside, the precincts of a port or an airport
-          Transport of goods or passengers  
Any business entity located in the taxable territory
CG, SG, UT, OR LOCAL AUTHORITY
Service supplied by CG ,SG , UT OR LOCAL AUTHORITY by way of renting of immovable property to a person registered under the CGST
Any person registered under GST Act
Any person
Service supplied by any person by way of transfer of development rights or floor space index for construction of a project by a promoter
promoter
Any person
Long term lease of land (more than 30 years ) 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
promoter
A director of a company or a body corporate
Service supplied by director of a company or a body corporate to the said company or the body corporate
The company or body corporate located in taxable territory
An insurance agent
Service supplied by an insurance agent to any person carry on insurance business
Any person carrying insurance business , located in taxable territory
A recovery agent
Service provided by recovery agent to a banking company, NBFC, or financial institution
A banking company or financial institution , or NBFC located in taxable territory
Author , music composer, photographer , artist,
Supply of service by an author or music composer, photographer, artist by way of transfer or permitting the use of a copyright covered under section13 (1)(a) of the copyright Act 1957
Publisher , music company , producer or the like , located in the taxable territory

Author 
CA Pooja Shukla FCA
RYPS & ASSOCIATES LLP
Website:www.ryps.in
Contact No: 9810505547

Comments

Post a Comment

Popular posts from this blog

Commissioner Has Power To Cancel Registration of Trust

Image
      Commissioner Has Power To Cancel  Registration of Trust Amendment of   Section 12AA of income tax act with effect from 1 st November 2019, provides that cancellation of registration can be on two grounds i.                      The Principal Commissioner or the commissioner is satisfied that activities of trust or institution   are not genuine or are not being carried out in accordance with its objects     AND & ii.                    Where a trust or an institution has been granted registration under section 12A and subsequently ,it is noticed that the trust or institution has violated requirements of any other law which was material for the purpose of achieving its objects , the principal commissioner or commissioner may, by...
Read more

GOOD NEWS FOR SALARIED PERSON WHO EARN RS 50,000 P.M.

Image
IF INCOME OF RS 50,000 PER MONTH THEN NO TDS  A)STANDARD DEDUCTION FROM GROSS SALARY UNDER SECTION 16 (ia) of (“The Act”) As per the provision prior to amendment A deduction of  Rs  40,000  or   Amount of salary  (whichever is less). i.e.  Rs  40,000 As per amendment made in this provision w.e.t. A .Y. 2020-21 The deduction has been raised from Rs 40,000 to Rs 50,000 . i.e.  Rs 50,000 B)REBATE FROM INCOME TAX TO A RESIDENT INDIVIDUAL UNDER SECTION 87A of (“the Act”)   As per provision prior to amendment   Rebate u/s 87 A is available if – i) His total taxable income upto Rs 3,50,000          Quantum of rebate is –           Amount of income -tax payable or Rs 2500 (whichever is less)                            i.e  Rs 2500   As per amendment made in...
Read more
Image
GIFT TO NRI  IS TAXABLE IN INDIA NOW ONWARDS Amendment in Section 9 of Income Tax Act, 1961 As per existing provision of section 9 of income tax act, in case of Non resident Income earned outside India or received outside India is not taxable in the hands of non-residents. Non-residents are taxable in respect of income earned in India or deemed to be earned in India or received in India or deemed to be received in India only under section 9 of the Income Tax Act, 1961, (“the Act”). Gifts were made by residents in India to non residents upon which non resident claimed that those gifts were not taxable under the Act as that income neither accrued nor arose in India.  India wherein those gifts were claimed to be non-taxable in India as the gifted income did not accrue or arise in India. Those gifts comprised of payment of money and /or transfer of  property situated in India. Section 56(2)(x) of the Income-tax Act provides i.e. if any sum of money w...
Read more