GST on purchases from unregistered purchases
By: – Naimish Padhiar
Goods and Services Tax – GST
Dated:- 2-8-2017<\/p>\n
Reverse Charge Mechanism under GST and implications of exemption upto ₹ 5000 per day
\nLet's look at the critical provisions of the GST law which have enabled reverse charge mechanism :-
\nCompulsory Reverse Charge even if the supplier is registered –
\nSec 9(3) The Government may, on the recommendations of the Council, by notification, specify categories of supply of goods or services or both, the tax on which shall be paid on reverse charge basis by the recipient of such goods or services or both and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both.
\nThe above section primarily covers services availed from Goods Transport Agency, Lawyer, government, corporate sponsorship, director etc.
\nReverse Charge if the supplier is unregistered –\n<\/p>\n
= = = = = = = =<\/p>\n
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For full text:-Visit the Source <\/a><\/p>\n
\nTo sum up, the supply should be intra state supply (within the state) and can be for goods as well as services or both. Moreover the supply should be received by the registered person from an unregistered dealer only and upto a daily limit of ₹ 5000\/-
\nExample:-
\nMr. X purchased following items from unregistered dealer, all are dated 01.07.2017 as under:
\n1st bill – From Ram: Stationery = 2000\/-
\n2nd bill – From Shyam: Lunch = 1000\/-
\n3rd bill – From Madhu : Books = 3000\/-
\nIn this case, The bills of Mr. X will not get covered under this notification as aggregate value of all supplies exceeds 5000\/- on a single date (01.07.2017)
\nExemption would have been available if,:
\n1) Bill dates are different (So that it will come under 5000\/- day limit, say bill date of Ram is 02.07.2017)
\n2) Any of the bills are 1000\/- less than the mentioned value(Say Bill <\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nWhether this daily limit benefits would be available if the goods\/services received from persons covered under 9(4) are blocked credits?
\nThe benefit of daily limit would be available. Output Tax under reverse charge would be payable if it crosses the daily limit even though they are covered under blocked credits.
\nWhat if the limit crosses 5000 in a day, is GST payable over and above the value or from rupee 1?
\nIf the value of taxable supplies exceeds ₹ 5000 per day for all suppliers, then GST would be payable on the Total value of the supplies received from unregistered persons.
\nIs this limit applicable to all supplies?
\nThe limit is applicable to only taxable supply of goods or services or both. Exempt supplies are out of the perview of this notification.
\nMr. X purchased following items from unregistered dealer, all are dated 01.07.2017 as under:
\n1st bill – From Ram: Stationery = 2000\/-
\n2nd bill – From Shyam: Ho<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nCan credit be availed for these taxes paid and on what basis, any invoice issue requirement?
\nCredits can be availed on payment of GST in cash. A consolidated monthly tax invoice can be raised if supplies are received from a single vendor. The Invoice shall be raised on the date of receipt of goods or services or both. Also a payment voucher needs to be issued on the date of making any advance payment as the time of supply is invoice of payment whichever is earlier.
\nWe have compiled the daily expenses which would be liable to GST if procured from unregistered supplier as below:-
\nSr. No.
\nNature of Expenses
\nGST Rate
\n\tGST IMPACT \/ OTHER REMARKS
\nSupplies from UR (RCM Applicable)
\n\tNo GST \/ NIL GST or EXEMPTED :-
\n\t1
\n\tElectricity Charges
\n\t0%
\n\tOut of GST
\n\t2
\n\tWater Charges
\n\t0%
\n\tOut of GST
\n\t3
\n\tBank Interest
\n\t0%
\n\tOut of GST
\n4
\n\tProfessional Tax
\n\t0%
\n\tTax levied by local body \/ other association out of GST
\n5
\n\tLicense renewal like Pollution, <\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\n18
\n\tWarranty Labour Charges
\n\t0%
\n\tIf there is no supply element & no consideration
\n19
\n\tDonation
\n\t0%
\n\tIf there is no supply element & no consideration
\n20
\n\tLabour Welfare Fund Contribution
\n\t0%
\n\tOut of GST
\n21
\n\tStaff Medical Expenses
\n\t0%
\n\tExployee service without any margin
\n22
\n\tFine & Penalities by Government
\n\t0%
\n\tOut of GST
\n23
\n\tDiscounts – shown in bill
\n\t0%
\n\tGST applicable is after all discount
\n– if shown in the bill
\n24
\n\tFree Gifts, Gold Coin to Customers
\n\t0%
\n25
\n\tInterest on Service Tax\/ TDS
\n\t0%
\n\t26
\n\tInterest on Vehicle Loan
\n\t0%
\n\t27
\n\tInterest Others
\n\t0%
\n\t28
\n\tLocal Conveyance
\n\t0%
\n29
\n\tTransportation Charges – Non GTA \/ Trucks
\n\t0%
\n\tGST Applicable & No ITC :-
\n\t28
\n\tFood Expense
\n\t12% \/
\n\tNo ITC
\n29
\n\tTravel claims – Radio Taxi (Rent-a-cab)
\n\t5%
\n\tNo ITC
\n30
\n\tTransportation Charges – GTA
\n\t5%
\n\tNo ITC
\n\t31
\n\tClub & Membership fees
\n\t18%
\n\tNo ITC
\n32
\n\tLife Insurance Exps for Employees
\n\t18%
\n\tNo ITC
\n33
\n\tWork Contract Service<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\n\t18%
\n\t50
\n\tInsurance Charges
\n\t18%
\n51
\n\tLegal charges to advocate
\n\t18%
\n\tAdvocate raise bill without GST component – RCM to us
\n52
\n\tLoading & unloading Charges
\n\t18%
\n53
\n\tLocal Conveyance
\n\t5%
\n\/ 12%
\n54
\n\tMediclaim Policy Premium Contribution A\/ c
\n\t18%
\n55
\n\tMobile Allowance
\n\t18%
\n\tPure Agent Service \/ If margin then GST applicable
\n\t56
\n\tOther Training Expense
\n\t18%
\n57
\n\tPostage and Courier Charges
\n\t18%
\n\tSubject to certain exemptions
\n\t58
\n\tPrinting & Stationery(Flex Printing, Broad Printing, Notice Printing)
\n18%
\n\t59
\n\tRates and Taxes
\n\tActuals
\n\tDepends on case to case basis
\n\t60
\n\tRecruitment Expenses
\n\t18%
\n\t61
\n\tRent Paid
\n\t18%
\n62
\n\tRent Paid for Mess (Employees)
\n\t18%
\n\t63
\n\tRepair and Maintenance – Building \/ Electrical \/ P& M
\n\/ Others
\n18%
\n64
\n\tRTO Expenses
\n\t18% or
\n28%
\n\t65
\n\tSales Promotion – Others \/ SSI \/ Display
\n\t18%
\n\t66
\n\tSponsorship services
\n\t18%
\n\tReverse Charge to Service Receiver
\n– ITC can be availed
\n\t67
\n\tSecurity Charges
\n\t18%
\n\t68
\n\tSta<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n