File your GST Annual Return by 31/12/2018

 

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Reverse Charge Under GST

Reverse Charge Under GST

Reverse Charge Under GST

Reverse Charge means

“the liability to pay tax by the recipient of supply of 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 subsection (4 ) of section 5 of the Integrated Goods and Services Tax Act”

Essentially it means as against a normal transaction of sale of goods or supply of services wherein the supplier is chargeable to pay tax in case of reverse charge it is the receiver who pays tax or in some cases both the receiver and supplier are chargeable to tax.

 

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Reverse Charge on Services

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Reverse Charge on Services

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Reverse Charge on goods

Provision for Reverse Charge in case of supply of goods or services to a registered person by an unregistered person: sec 9(4) 

The central tax in respect of the supply of taxable goods or services or both by a supplier, who is not registered, to a registered person shall be paid by such person on reverse charge basis as the recipient 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

An exemption is given vide notification no 08/2017 dtd 28.06.2017 for a total supply of goods and services aggregating to Rs 5000.00 per day Exemption-from-reverse-charge-upto-Rs5000-per-day-CGST

Registration

All persons  procuring gods/services notified above, on which GST  is payable on reverse charge, have to  be registered mandatorily as per Section 24 (iii) of CGST/SGST law,  irrespective of the threshold.

Time of supply for goods under reverse charge

In case of reverse charge, the time of supply shall be the earliest of the following dates –

  • the date of receipt of goods OR
  • the date of payment OR
  • the date immediately after 30 days from the date of issue of invoice by the supplier

If it is not possible to determine the time of supply under (a), (b) or (c), the time of supply shall be the date of entry in the books of account of the recipient.

Time of supply for services under reverse charge

In case of reverse charge, the time of supply shall be the earliest of the following dates –

(a) The date of payment

OR

(b) The date immediately after 60 days from the date of issue of invoice by the supplier

If it is not possible to determine the time of supply under (a) or (b), the time of supply shall be the date of entry in the books of account of the receiver of service.

Input tax credit on reverse charge supplies

Tax paid on reverse charge basis will be available for input tax credit if such goods and/or services are used in the course or furtherance of business. The service recipient (i.e., who pays reverse tax) can avail input tax credit

Invoice in case of reverse charge

As per section 31(3)(f), person discharging GST liability under reverse charge under section 9(3) or 9(4) shall issue an invoice in respect of goods or services or both received by him from the supplier. Further as per 31(3) (g) shall issue a payment voucher at the time of making payment to the supplier.

 

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