Reverse charge mechanism
Query (Issue) Started By: – Vishal mandaviya Dated:- 23-3-2018 Last Reply Date:- 26-3-2018 Goods and Services Tax – GST
Got 4 Replies
GST
Reverse charge
Lets start with an example of person doing trading of cotton.
For example Mr. A is cotton trader. He has GST number.
Lets say this is July 2017 and Mr. A purchase some amount of cotton from farmers (i e. Unregistered dealer). He buys a cotton worth of ₹ 1 Crore and sale it.
Now for GST he will need to pay 5 lakh for sales and 5 lakh as a reverse charge. So he pays total 10lakh of GST into which 5 lakh will be saved as an ITC.
Now the next month i.e. August.
This time Mr. A purchase cotton worth of 20lakhs and sell it.
Now this time he will pay 1
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der tax bracket and thereby increase in revenue to the govt. however this provision has been suspended upto 30th June 2018 as decided in the gst council meeting held on 10.03.2018.
first you pay 5lacs of reverse charge on say 17th of next month and let it get reflected in gst credit ledger of gstn. then while making payment of 5 lacs on sales then you will be claim set of the tax paid under reverse . by this way your money will not be blocked. the said method is within law as the provision states that credit can be taken in the same month.
Reply By Vishal mandaviya:
The Reply:
Dear Sir,
Thanks for your kind reply.
I have ITC of ₹ 8lakhs right now. Now how can I claim it back?
Reply By gstwithtmi tmi:
The Reply:
The tax you ar
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