Goods and Services Tax – GST – By: – Lakhvinder Singh – Dated:- 14-7-2017 Last Replied Date:- 21-7-2017 – A. Introductory provisions of reverse charge under GST Law. • In terms of section 9(1) of Central Goods and Services Tax Act, 2017, Central Goods and Services Tax (CGST) shall be levied on all intra-state supplies of goods & services or both except the supply of alcoholic liquor for human consumption. • In terms of section 5(1) of Integrated Goods and Services Tax Act, 2017, Integrated Goods and Services Tax (IGST) shall be levied on all inter-state supplies of goods & services or both except the supply of alcoholic liquor for human consumption. • However, by virtue of section 9(3) of Central Goods and Services Tax Act, 2017 and section 5(3) of Integrated Goods and Services Tax Act, 2017, the Government on recommendations of council may specify categories of supply of goods or services or both wherein tax shall be paid under reverse charge. Government has is
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
rvices Tax Act, 2017: Reverse charge means the liability to pay tax by the recipient of the supply of the goods or services or both instead of the supplier of such goods or services or both under sub-section (3) or sub-section (4) of section 9, or under sub-section (3) or sub-section (4) of section 5 of the Integrated Goods & Services Tax Act. • Reverse charge is only a mode of collection of CGST/SGST or IGST on Supplies of goods and services where the service receiver (may be wholly or partially) will be liable to pay CGST/SGST or IGST to Government. • As per Section 9 of the CGST Act, 2017 there are two types of supplies which are liable to tax under reverse charge mechanism which are: Specified categories of supply of goods or services or both as notified under GST Law. Supply of taxable goods or services or both having value more than ₹ 5000/- per day by an unregistered supplier to a registered person. C. Reasons for Reverse Charge • Safeguarding the intere
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
r law for the time being in force in any part of India. c) Any co-operative society established by or under any law. d) Any dealer of excisable goods, who is registered under the Central Excise Act, 1944 or the rules made there under. e) Any Body-corporate established, by or under any law; or f) Any partnership firm whether registered or not under any law including association of persons g) Casual Taxable Person Person who pays the freight shall be treated as receiver of service. Legal service Services provided by individual advocate or a firm of advocates including senior advocate. Service receiver should be a business entity in taxable territory. Liability of service receiver is 100%. Service provided to another advocate or firm of advocates; non business entity or business entity having turnover of less than ₹ 20 lacs in previous year exempted. Services of Arbitral Tribunal • Services provided by an arbitral tribunal. Service receiver should be a business entity in taxabl
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ver -Company or body corporate – liable for 100 % Services by An Insurance Agent Services provided by an insurance agent. • Service receiver is any person carrying on insurance business. Liability of service receiver – 100% Services by Recovery Agent Services provided by a Recovery Agent. Service receiver is Banking Company or Financial Institution or a non banking financial company. Liability of service receiver – 100% Goods Transportation up to Custom Station (Not Covered in CGST LAW) Services provided by way of transportation of goods by a vessel from a place outside India up to the Customs station of clearance in India by a person located in non-taxable territory to a person located in non-taxable territory. Importer as defined under sec. 2(26) of the Customs Act, 1962 is to be deemed as Service Recipient. Liability of service receiver – 100% Enjoyment of Copy Rights Services provided by Author or music composer, photographer, artist, etc. by way of transfer or permitting the
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
provided by mutual fund agent or distributor to a mutual fund or asset management company. • To be provided by a selling or marketing agent of lottery tickets to a lottery distributor or selling agent. • Renting of motor vehicle except through e-commerce operators. • Supply of manpower or security service. • Work Contract Service G. Issues Is the reverse charge mechanism applicable only to services? – No, reverse charge applies to supplies of both goods and services. Composition scheme not applicable for tax payable under RCM: It is important to note that for any tax payable under reverse charge mechanism, the option of payment under composition scheme will not be available as per the provision of section 10(1) of CGST Act, 2017. In other words, a taxable person opting for composition scheme will be required to pay tax on supplies taxable under RCM at regular rates and not the composition rate. • Time of Supply of Goods under Reverse Charge – Where tax is paya
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
find buyers. Who will purchase goods from them? (Only limit is 5000/- per day.) – Reply By Maninder Singh – The Reply = Sir, As per section 5(4) of IGST Act, if a registered person purchase any goods or service exceeding ₹ 5000/- per day from any or all unregistered supplier, he is liable to pay IGST on reverse charge basis. However when we have a look on the section 24 of CGST Act, it says that person making any inter-state taxable supply, will have to take registration mandatory, it means that unregistered person can not make inter-state supply, So here how the question of reverse charge arise. Please correct me if I am taking a wrong view and clarify in case of goods or service or both. I have one more query regarding the reverse charge on expenses incurred by employees for official purpose, like conveyance, food and beverages, telephone or internet where they receive services from unregistered person. Whether company is liable to pay GST on reverse charge when it makes reimb
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
gistered purchase is ₹ 11500/- in a day. Is it liable to pay RCM.I seen some youtube video , they are telling that ₹ 5000/- per day from a single person not in gross or in total. further I purchase ₹ 6000/- then may it be taxable in whole under RCM. – Reply By Rohit Bhura – The Reply = Sir, under point D you have written Taxable territory – Whole of India except Jammu & KashmirBut as GST is applicable to J & K also so the taxable territory should be whole of india – Reply By MANOHARAN ARUMUGAM – The Reply = Sir,For inter-state services the service provider has charges us IGST @ 18% But in the invoice, they have shown this as CGST & SGST. The service provider says that this is per their system. My query is if the recipient unit can avail input tax credit? Pl. clear my doubt.A.Manoharan – Reply By KASTURI SETHI – The Reply = Under RCM, recepient can take credit only after making payment in cash. – Reply By Ganeshan Kalyani – The Reply = Nice article. – Reply
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
= Dear Sir,Thanks for giving clarifications on the query. Request you to please share your opinion on reverse charge in case of interstate supply where registration is mandatory for a person making interstate supply. – Reply By swaminathan venkataraman – The Reply = IMPROMPTUThe term 'reverse charge', as explained, calls for an elucidation. To be precise, the point not made quite clear is this: Whether the recipient acts only as a collecting agent of the levy; that is, the burden has to be picked up and borne by the supplier, in all situations? To Dilate: • Reverse charge is ONLY A MODE OF COLLECTION of CGST/SGST or IGST on Supplies of goods and services where the service receiver (MAY BE WHOLLY OR PARTIALLY) WILL BE LIABLE to pay CGST/SGST or IGST to Government. The term reverse charge , as thus explained, in one s view, is lacking in clarity.According to the scheme of things, as read and understood: Any levy of service tax, be it on supply of services (or of goods), if
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ublic domain , for useful guidance. – Reply By swaminathan venkataraman – The Reply = WRT – Taxable territory -Whole of India except Jammu & Kashmir There is another aspect which has been brought out and shared on Facebook / Linked in, intended for deliberation by eminent experts. That is on the point of doubt in one s mind, -whether it is amply clear that the service tax jurisdiction is limited to or extends beyond the territorial waters of India (i.e. 12 nautical miles ) . For comparison, need to keep in focus the areas of ongoing controversy , and issues still kept alive, in the matter of income-tax jurisdiction. – Reply By Pratik Jain – The Reply = Dear Sir,In Case of reimbursement by employer to employee for telephone exp, food, etc, we understand RCM is not applicable, so how would be book these expenses in our balance sheet, under employee exp or under individual heads like telephone exp, food exp, etc. – Reply By Pratik Jain – The Reply = Also please help, what entries we h
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
Singh ji very nice article.Sir I have query i.e. does advance payment to FOREIGN VENDOR for import of goods, liable to IGST under RCM as the foreign vendor is unregistered dealer as per GST Act ?Further if we pay IGST on RCM basis on payment of advance, again the same will be taxed at the time of import when the BILL OF ENTRY will be filed, which implies double taxation.Sir please clarify this issue.Thanks in advance. – Reply By Gautam Kumar Bera – The Reply = ALL UNREGISTERED DEALER:-Suppose if I purchased fro July-20171. Tea Expenses Rs.10000/-2. Printing & Stationery Rs.10000/-3. office expenses Rs. 10000/-I have incurred ₹ 30,000/- all unregistered Purchases and we need to pay GST under RCM and Bill may be raised all together in a single bill at the end of July-2017. a) In case of billing we need to mention separate HSN Codes for the above items separately or it may be included in a single HSN Code. b) In case of separate HSN Code is there any exact HSN Codes for the abov
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
red person in Delhi itself. In the said transaction, he himself arranges the transporter and the risk & rewards of the goods are transferred to recipient on the factory gate of person in delhi. What shall be the place of Supply??? – If i consider place of Supply at Delhi only- The same would amount to Intrastate Transaction, thus out of IGST. Will I be Liable to take registration as casual dealer?? – If The Place of Supply is U.P.- Who will discharge IGST?? Will the Supplier be liable for Compulsory registration? Please Guide. Thanks & Regards, Abhishek – Reply By Raman Singla – The Reply = What is the maximum cash purchase limit from unregistered person in a single day under RCM ???? – Reply By abhishek ghai – The Reply = Sir,Waiting for your response. kindly also clarify the manner of billing to be done in case of Purchases from Unregistered persons- Whether Self billing (Treating as outward Supply) or Inward Purchase billing to be done??Thanks & regards,CA Abhishek – Rep
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =