Gst Reverse Charge Transactions

GST reverse charge mechanism, (RCM) as the name suggests, means the liability of tax is with the recipient of goods or services, rather than the supplier. GST is applicable on reverse charge basis for certain transactions specified by the Government. In this article, we look at some of the transactions for which GST reverse charge is applicable. Note: In the 23rd GST Council Meeting, certain provisions relating to reverse charge mechanism (RCM)have been temporarily suspended. Also, taxes paid by the recipient for the inward supply of goods would not be added to the turnover of the recipient but would be added to the turnover of the supplier.

Goods for Which Reverse Charge is Applicable

For the following goods, supplied by the category of people mentioned below, the recipient will be liable for paying GST on RCM basis:

S.No	Goods Type	Supplier	Liable Recipient
1	Cashew nuts, not shelled or peeled	Agriculturist	Any registered person
2	Bidi wrapper leaves(tendu)	Agriculturist	Any registered person
3	Tobacco leaves	Agriculturist	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	Supply of lottery	State Government, Union Territory or any local authority	Lottery distributor or selling agent

Note: In the case of composition dealers registered under the

composition scheme, GST must be paid on reverse charge basis for all purchases from an unregistered dealer.

Services for Which RCM is Applicable

S. No	Services Type	Supplier	Liable Recipient
1	Supply of services by a Goods Transport Agency(GTA)	Goods Transport Agency(GTA)	Any factory registered under or governed by the Factories Act, 1948 Any society registered under the Societies Registration Act, 1860 or under any law for the time being in force in any part of India Any Co-operative society established by or under any law Any person registered under any of the Acts such as CGST, IGST, SGST/UGST Any body corporate established by/under any law Any partnership firm whether registered or not under any law including association of persons Any casual taxable person located in the taxable territory
2	Services supplied by any individual advocate by way of representational services before any court, tribunal or authority, directly or indirectly, to any business entity located in the taxable territory, to any legal entity, including where the contract has been signed through another advocate or a firm of advocates	An individual advocate including a senior advocate, or firm of advocates	Any business entity located in the taxable territory
3	Services supplied by an arbitrary tribunal to a business entity	An arbitrary 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,	Central Government, State Government, Union territory or local authority	Any business entity located in the taxable territory, except; Removing of immovable property 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/Union territory and local authority Services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport Transport of goods or passengers
6	Services supplied by a director of a company or a 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	An insurance agent	Any person pursuing an insurance business, located in the taxable territory
8	Services supplied by a recovery agent	A recovery agent	A banking company or a financial institution or a non-banking company, located in the taxable territory
9	Supply of services by an author, music composer, photographer, or the like, by way of transfer of copyright, relating to original literary, dramatic, musical or artistic works	Author, music composer, photographer, artist, or the like	Publisher, music company, producer or the like, located in the taxable territory

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Frequently Asked Questions

Common questions about GST Reverse Charge Transactions: Understanding RCM Taxes.

Under the GST Reverse Charge Mechanism, the liability of paying GST is on the recipient of goods or services, rather than the supplier. The Government has specified certain transactions where GST is applicable on a reverse charge basis.

Yes, in the 23rd GST Council Meeting, certain provisions relating to reverse charge mechanism (RCM) have been temporarily suspended. Additionally, taxes paid by the recipient for inward supply of goods would not be added to the turnover of the recipient but would be added to the turnover of the supplier.

For goods like cashew nuts (not shelled or peeled), bidi wrapper leaves (tendu), tobacco leaves, silk yarn, and supply of lottery, the recipient is liable to pay GST on a reverse charge basis when procured from specific suppliers like agriculturists, silk yarn manufacturers, state governments, etc.

Yes, in the case of composition dealers registered under the composition scheme, GST must be paid on a reverse charge basis for all purchases from an unregistered dealer.

Services like those provided by Goods Transport Agencies, individual advocates, arbitral tribunals, sponsorship services, services by government bodies, directors of companies, insurance agents, recovery agents, and transfer of copyright by authors, composers, etc. are covered under RCM.

For services provided by a Goods Transport Agency, the liable recipients are factories registered under the Factories Act, societies, co-operative societies, registered persons under GST laws, body corporates, partnership firms, and casual taxable persons located in the taxable territory.

Yes, services by government bodies are not covered under RCM for removing immovable property, services by the Department of Posts (except speed post, express parcel post, life insurance, and agency services), services related to aircraft or vessels, and transport of goods or passengers.

For services provided by an insurance agent, any person pursuing an insurance business located in the taxable territory is liable to pay GST on a reverse charge basis.

For transfer of copyright relating to original literary, dramatic, musical or artistic works by authors, music composers, photographers, or artists, the publisher, music company, producer, or the like located in the taxable territory is liable to pay GST on a reverse charge basis.

Yes, the article mentions that in the case of composition dealers registered under the composition scheme, GST must be paid on a reverse charge basis for all purchases from an unregistered dealer.