Generally, the supplier of goods or services is liable to pay GST. However, in specified cases like imports and other notified supplies, the liability may be cast on the recipient under the reverse charge mechanism. Reverse charge means the liability to pay tax is on the recipient of supply of goods or services instead of the supplier of such goods or services in respect of notified categories of supply. TWO TYPE OF REVERSE CHARGE SCENARIOS IN GST LAW. First is dependent on the nature of supply and/or nature of supplier. This scenario is covered by section 9 (3) of the CGST/ SGST (UTGST) Act and section 5 (3) of the IGST Act. Second scenario is covered by section 9 (4) of the CGST/SGST (UTGST) Act and section 5 of the IGST Act where taxable supplies by any unregistered person to a registered person is covered. Time of Supply under Reverse Charge Mechanism In case of Goods As per Section 12(3) of the CGST Act, in case of supplies in respect of which tax is paid or liable to be paid on reverse charge basis, the time of supply shall be the earliest of the following dates, namely: the date of the receipt of goods; or the date of payment as entered in the books of account of the recipient or the date on which the payment is debited in his bank account, whichever is earlier; or the date immediately following thirty days from the date of issue of invoice or any other document, by whatever name called, in lieu thereof by the supplier: Provided that where it is not possible to determine the time of supply under clause (a) or clause (b) or clause (c), the time of supply shall be the date of entry in the books of account of the recipient of supply. In case of Services As per Section 13(3) of the CGST Act, in case of supplies in respect of which tax is paid or liable to be paid on reverse charge basis, the time of supply shall be the earlier of the following dates, namely: the date of payment as entered in the books of account of the recipient or the date on which the payment is debited in his bank account, whichever is earlier; or the date immediately following sixty days from the date of issue of invoice or any other document, by whatever name called, in lieu thereof by the supplier: Provided that where it is not possible to determine the time of supply under clause (a) or clause (b), the time of supply shall be the date of entry in the books of account of the recipient of supply in case of supply by associated enterprises, where the supplier of service is located outside India, The time of supply shall be the date of entry in the books of account of the recipient of supply or the date of payment, whichever is earlier. Some practical point need to be considered in RCM All recipients required to pay tax on goods or services or both under RCM are mandatorily required to obtain GST Registration and the threshold of ` 40 Lakhs/ 20 Lakhs is not applicable to them. However, registration need not be obtained by the recipient if such recipient supplies only services covered under Notification No. 12/2017-Central Tax (Rate), dated 28-6-2017. Where any registered person is supplying specific goods or services or both notified by Government under RCM then invoice wise details of such supplies shall be reflected in Table 4B of FORM GSTR-1. A supplier shall not be eligible to claim input tax credit of GST paid on goods or services used to make supplies on which the recipient is liable to pay tax. GST payable under RCM shall be paid by the recipient by due date for furnishing FORM GSTR-3B. The payment of GST under reverse charge shall be made by the recipient by debit of electronic cash ledger only. Tax paid on RCM basis shall be available for input tax credit only if such goods and/or services are used, or will be used, in the course or furtherance of business. The recipient shall issue a self-invoice for the goods or services received from unregistered supplier. The recipient of supplies under RCM from an unregistered supplier can avail input tax credit on basis of self-invoice made by him. The recipient shall issue a payment voucher at the time of making payment for the goods or services received from a supplier of goods or services liable to tax under RCM. The condition of payment of value of service within 180 days of the date of supplier invoice is not applicable on supplies liable to tax under RCM. Hence, there would be no interest liability on account of the same.
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