REVERSE CHARGE MECHANISM (RCM) UNDER GST
What is Reverse Charge Mechanism?
Reverse charge Mechanism is defined under Section 2(98) which means the liability to pay tax by the recipient of the goods or services or both instead of the supplier of the goods or services or both under subsection(3) or subsection(4) of section 9 or, under subsection(3) or subsection(4) of section 5 of IGST Act.
A person who is required to pay tax under reverse charge has to mandatorily register under GST and the threshold limit of Rs. 20 lakh (Rs. 10 lakh for special category states except for Jammu & Kashmir) is not applicable among them.
Leviability of RCM (section-9):
How Time of supply under RCM is determined?
Note: If it is not possible to determine the time of supply under clause (a) or clause (b), the time of supply shall be the date of entry in the books of account of the recipient of the supply.
COMPLIANCES IN RESPECT TO SUPPLIES MADE UNDER RCM:
SUPPLY OF GOODS UNDER REVERSE CHARGE MECHANISM:
|SL.NO||Description of supply of Goods||Supplier of goods||Recipient of goods|
Cashew nuts, not shelled or peeled
|Agriculturist||Any registered person|
|2.||Bidi wrapper leaves (tendu)||Agriculturist||Any registered person|
|Any registered person|
|4.||Silk yarn||Any person who manufactures silk yarn from raw silk or silkworm cocoons for the supply of silk yarn||Any registered person|
|5.||Raw cotton||Agriculturist||Any registered person|
|6.||Supply of lottery||State Government, Union Territory or any local authority||Lottery distributor or selling agent|
|7.||Used vehicles, seized and confiscated goods, old and used goods, waste and scrap||Central Government, State Government, Union territory or a local authority||Any registered person|
SUPPLY OF SERVICES UNDER REVERSE CHARGE MECHANISM:
|Sl.No||Description of supply of Goods||Supplier of goods||Recipient of goods|
|1.||Any service supplied by any person who is located in non-taxable territory to any person other than the non-taxable online recipient||Any person located in a non-taxable territory||Any person located in the taxable territory other than the non-taxable online recipient.|
|2.||GTA Services||Goods Transport Agency (GTA) who has not paid integrated tax at the rate of 12%||Any factory, society, cooperative society, a registered person, body corporate, partnership firm, casual taxable person; located in the taxable territory|
|3.||Legal Services by advocate||An individual advocate including a senior advocate or firm of advocates||Any business entity located in the taxable territory 4 Services supplied by an arbitral tribunal to a business entity An arbitral|
|4.||Services supplied by an arbitral tribunal to a business entity||An arbitral tribunal||Any business entity located in the taxable territory|
|5.||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|
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 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|
|7.||Services supplied by a director of a company or a body corporate to the said company or the body corporate||A director of a company or a body corporate||The company or a body corporate located in the taxable territory|
|8.||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|
|9.||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|
|10.||Services supplied by a person located in the 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 non-taxable territory||Importer, as defined in clause (26) of section 2 of the Customs Act, 1962(52 of 1962), located in the taxable territory|
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, photograph her, artist, or the like||Publisher, music company, producer or the like, located in the taxable territory|
|12.||Supply of services by the members of Overseeing Committee to Reserve Bank of India||Members of Overseeing Committee constituted by the Reserve Bank of India||Reserve Bank of India.|
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