GST Reverse Charge Transactions
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)||
|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,
|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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Post by Sreeram Viswanath
IndiaFilings is India's largest online compliance services platform dedicated to helping people start and grow their business, at an affordable cost. We were started in 2014 with the mission of making it easier for Entrepreneurs to start their business. We have since helped start and operate tens of thousands of businesses by offering a range of business services. Our aim is to help the entrepreneur on the legal and regulatory requirements, and be a partner throughout the business lifecycle, offering support at every stage to ensure the business remains compliant and continually growing.