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9 (3&4) of CGST
9 (3&4) of CGST
‘’reverse charge’’ means the liability to pay tax by the recipient of goods or
services or both instead of the supplier of 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 and Services Tax Act;’’
There are two provisions under which GST is payable under reverse charge:
A) The first one is payable under section 9(3) of CGST Act, 2017. A list of goods
and services on which the tax is payable under the said section is notified thru
notification.
B) The second provision to pay tax is provided under section 9(4) of CGST Act,
2017 where the registered recipient is liable to pay tax on all purchase of goods
or services or both from an unregistered person under GST.
A list of goods on which GST is payable u/s 9(3) of the Act is given in the Notification
no. 4/2017-CTR dated 28.06.2017. And the category of services on which tax is
payable u/s 9(3) is enumerated in the Notification no. 13/2017-CTR dated 28.06.2017.
The goods specified in the notification no. 4/2017 are cashew nuts, not shelled or
peeled, bidi wrapper leaves (tendu), tobacco leaves, silk yarn, raw cotton, used
vehicles, seized and confiscated goods, old and used goods, waste and scrap, priority
sector lending certificate. The recipient of these goods are liable to pay GST under
reverse charge.
The category of services enumerated in the notification no. 13/2017 are discussed
below in detail:
Any business entity located in the taxable territory being recipient of the services
supplied by an arbitral tribunal shall pay tax under reverse charge basis.
Sponsorship Service:
Any body corporate or partnership firm located in the taxable territory shall pay tax on
receipt of sponsorship service from any person on reverse charge basis.
A business entity located in the taxable territory shall pay tax on receiving service from
the Central Government, State Government, Union territory or local authority excluding
renting of immovable property, services supplied by the Department of Posts by way of
speed post, express parcel post, life insurance, and agency services provided to a
person other than Central Government, State Government or Union territory or local
authority; services in relation to an aircraft or a vessel, inside or outside the precincts
of a port or an airport; and transport of goods or passengers.
A person registered under the CGST Act, 2017 shall pay tax on the services of renting
of immovable property received from the Central Government, State Government,
Union territory or local authority, services
The company or a body corporate located in the taxable territory shall pay GST under
reverse charge on receiving service from a director of a company or a body corporate.
Any person carrying on insurance business, located in the taxable territory shall pay
GST under reverse charge on the services supplied by an insurance agent.
A publisher, music company, producer or the like located in the taxable territory shall
pay GST under reverse charge on receiving service from an author, music composer,
photographer, artists or the like by way of transfer or permitting the use or enjoyment
of a copyright covered under clause (a) of sub-section (1) of section 13 of the Copyright
Act, 1957 relating to original literary, dramatic, musical or artistic works.
Reserve Bank of India shall pay GST under reverse charge on receiving services from
the members of Overseeing Committee constituted by RBI.
The second method of payment of GST under reverse charge is provided u/s
9(4) of CGST Act. As per the said provision a registered person shall pay tax on
receiving goods or services or both from a person who is not registered under GST.
Further, vide Notification no. 8/2017-CTR dated 28.06.2017 the tax payment as
required u/s 9(4)was exempted if the aggregate value of the supplies of goods or
services or both received by a registered person from any or all the suppliers, who is or
are not registered does not exceeds ₹ 5000/-.
Thereafter, the provision of section 9(4) of CGST Act, was suspended till 31.03.2018
vide Notification no. 38/2017-CTR dated 13.10.2017. It was again suspended till
30.06.2018 vide notification no. 10/2018-CTR dated 23.03.2018. The Government of
India has further suspended the said provision till 30.09.2018 vide Notification no.
12/2018-CTR dated 29.06.2018. In view of these change it is understood that the
registered person is exempted from payment of GST on the purchase of goods or
services or both from an unregistered person under GST till the completion of
exemption period.