24-Jun-2018

Reverse Charge Mechanism

Indirect Tax Committee of ICAI – Certificate Course

23.06.18

CA Deepali Mehta
Shah & Savla LLP
Chartered Accountants

 Reverse Charge Mechanism

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Reverse Charge Mechanism CA Deepali Mehta

Reverse Charge Mechanism CA Deepali Mehta

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Specified Goods covered under RCM CA Deepali Mehta

Sr. No. HSN Description of Goods Supplier of Goods Recipient of Supply

1 0801 Cashew Nuts, not shelled or peeled Agriculturist Any RTP

2 1404 90 10 Bidi wraper leaves (tendu) Agriculturist Any RTP

3 2401 Tobacco Leaves Agriculturist Any RTP

4 5004 to 5006 Silk Yarn Any person who Any RTP

manufactures silk yarn
from raw silk or silk worm
cocoons for supply of silk
yarn
5 Supply of Lottery State Government, Union Lottery Distributor or
Territory or Local Lottery Agent
Authority
N. No. 4/2017 – Central Tax (Rate)
N. No. 4/2017 – Integrated Tax (Rate)

Specified Services covered under RCM – Intra-State CA Deepali Mehta

Sr. No. Description of Supply of Services Supplier of Services Recipient of Supply

1 Goods Transport Agency in respect of GTA a. Factory registered or governed by

transportation of goods by road the Factories Act, 1948; or
b. Any Society registered under
Societies Registration Act, 1860;
or
c. Any Co. Op. Society established
by or under any law; or
d. Any person registered under
GST Law; or
e. Any body corporate established,
by or under any law; or
f. Any partnership firm, or AOP;
g. Any Casual taxable person
Notification No. 13/2017 – Central Tax (Rate)

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Whether Transporter needs to be registered

Notification No. 5/2017 – Central Tax

G.S.R. (E).- In exercise of the powers conferred by sub-section (2) of section 23 of the Central
Goods and Services Tax Act, 2017 (12 of 2017), the Central Government hereby specifies the
persons who are only engaged in making supplies of taxable goods or services or both, the total
tax on which is liable to be paid on reverse charge basis by the recipient of such goods or
services or both under sub-section (3) of section 9 of the said Act as the category of persons
exempted from obtaining registration under the aforesaid Act.

GTA provides exempt GTA provides services to GTA sales trucks or tyres
services (Interest), Individuals or HUF, during the course of business,
exemption applicable ? exemption applicable ? exemption applicable ?

Whether Transporter needs to be registered

Notification No. 5/2017 – Central Tax

G.S.R. (E).- In exercise of the powers conferred by sub-section (2) of section 23 of the Central
Goods and Services Tax Act, 2017 (12 of 2017), the Central Government hereby specifies the
persons who are only engaged in making supplies of taxable goods or services or both, the total
tax on which is liable to be paid on reverse charge basis by the recipient of such goods or
services or both under sub-section (3) of section 9 of the said Act as the category of persons
exempted from obtaining registration under the aforesaid Act.

GTA provides exempt GTA provides services to GTA sales trucks or tyres
services (Interest), Individuals or HUF, during the course of business,
exemption applicable ? exemption applicable ? exemption applicable ?

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Whether Transporter needs to be registered

 S. 22 of CGST Act provides for persons liable to be registered on crossing of limit of
aggregate turnover of Rs. 20 Lakhs.

 S. 23 of CGST Act provides that following persons shall not be liable to registration,
namely:–– (a) any person engaged exclusively in the business of supplying goods or services
or both that are not liable to tax or wholly exempt from tax under this Act or under the
Integrated Goods and Services Tax Act; (b) an agriculturist, to the extent of supply of
produce out of cultivation of land.

 S. 24 of CGST Act provides that notwithstanding anything contained in sub-section (1) of

section 22, the following categories of persons shall be required to be registered under this
Act - (iii) persons who are required to pay tax under reverse charge;

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Specified Services covered under RCM – Intra-State CA Deepali Mehta

Sr. No. Description of Supply of Services Supplier of Services Recipient of Supply

2. Representational Services provided by
Advocates including Senior Advocate
before any Court, Tribunal or authority.
It also includes contract for provision
of such service has been entered
through another advocate or a firm of
advocates, or by a firm of advocates, by
way of legal services, to a business
entity.
Individual Advocate Any business entity located in the
including Senior Advocate taxable territory.
or a frim of Advocate
Business entity located in the taxable
territory who is litigant, applicant or
petitioner, as the case may be, shall
be treated as the person who
receives the legal services for the
purpose of this notification

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Legal Services a. Advocate or firm of

Advocate providing legal
Legal Services - service Advocate services; or
or b. Business entity with an
provided in relation to advice, Firm of Advocate aggregate turnover of less
consultancy or assistance in any than Rs. 20Lakhs; or
N. No. 12/2017 – Central (Tax)) c. Any person other than
branch of law, in any manner Business entity.

and includes representational

services. [Part 2(zm)] NIL

a. Business entity with an

aggregate turnover of less
Business Entity means any than Rs. 20Lakhs; or
Senior Advocate
person carrying on business. a. Any person other than
Business entity.
[Part 2(n) ]
Press Release Dated 15-07-2017

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Specified Services covered under RCM – Intra-State CA Deepali Mehta

Sr. No. Description of Supply of Services Supplier of Services Recipient of Supply

3. Arbitral Tribunal An Arbitral Tribunal Any Business Entity

4 Sponsorship services provided to any Any persons Any Business Entity

body corporate or partnership firm

5 Services supplied except – (a) Central Government; Any Business Entity

(i) Renting of immovable property; (b) State Government
(ii) Speed post, express parcel etc.by (c) Union Territory
Department of Post; (d) Local Authority
(iii) In relation to air craft or vessel,
inside or outside the precincts of a
port or an airport;
(iv) Transport of goods or passenger

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Specified Services covered under RCM – Intra-State CA Deepali Mehta

Sr. No. Description of Supply of Services Supplier of Services Recipient of Supply

6 Director’ Services (i) Director of a company (a) Company; or

or
(ii) Director of a body (a) Body Corporate
corporate
7 Insurance Services (Life & General) Insurance Agent Insurance Companies

8 Recovery Services Recovery Agent Banking Company or a Financial

Institutions or a NBFC
9 Transfer or permitting the use or Author or music composer, Publisher, music company, producer or
enjoyment of a copyright covered under photographer, artist, or the the like, located in the taxable territory
S. 13 (1)(a) of the Copyright Act, 1957 like .
relating to original literary, dramatic,
musical or artistic works to a publisher,
music company, producer or the like.

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Specified Services covered under RCM – Inter-State CA Deepali Mehta

Sr. No. Description of Supply of Services Supplier of Services Recipient of Supply

10 Any service Any person located Any person located in the taxable
in a territory other than non-taxable
non-taxable territory online recipient.

11 Services supplied by a person located in A person located Importer, as defined in clause (26)
non- taxable territory by way of in of section 2 of the Customs Act,
transportation of goods by a vessel Non-taxable territory 1962(52 of 1962), located in the
from a place outside India up to the taxable territory.
customs station of clearance in India.

Non Taxable Territory – Taxable Territory –Supply

Territory which is outside of goods or services or both
the Taxable Territory – which is leviable to tax
2(79) N. No. 10/2017 – Integrated Tax (Rate)
under this Act. – 2(108)

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Unregistered Dealer

RECEIVES SERVICES /GOODS

Commission
Jalgaon Enterprise RM Purchases

Printing & Stationary Unregistered Dealer

1 2 Loading & Unloading

Hotels & Restaurants

GSTR-1

Issue an invoice to URP Can Avail ITC if it is not covered within Blocked Credit

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Exemptions
Notification No.8/2017-Central Tax (Rate)

New Delhi, the 28th June, 2017

G.S.R. (E).- In exercise of the powers conferred by sub-section (1) of section 11 of the
Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on being
satisfied that it is necessary in the public interest so to do, on the recommendations of the
Council, hereby exempts intra-State supplies of goods or services or both received by a
registered person from any supplier, who is not registered, from the whole of the central tax
leviable thereon under sub-section (4) of section 9 of the Central Goods and Services Tax Act,

Provided that the said exemption shall not be applicable where the aggregate value of such
supplies of goods or service or both received by a registered person from any or all the
suppliers, who is or are not registered, exceeds Rs. 5,000 in a day.

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No benefit if transaction is Inter-State

CA Deepali Mehta

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Time of Supply under RCM

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Supply of Goods under Reverse Charge – 12 (3)

Time of Supply – Earliest of

In any other case

Date immediately
Date of receipt of Date on which following 30 days from Date of entry in books of
Goods payment is made issue of invoice by account of recipient of
Supplier supply

“the date on which the payment is made” shall be the date on which the payment is entered in the books of
accounts of the recipient or the date on which the payment is debited in his bank account, whichever is earlier.

CA Deepali Mehta

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Supply of Services under Reverse Charge – 13 (3) CA Deepali Mehta

Time of Supply

Supply by Associate Enterprise

Date immediately
Date on which following 60 days
payment is made from issue of invoice
by Supplier
In any other case where supplier is located outside
India
Date of entry in
books of account of Date of entry in books of
recipient account of recipient or date of
payment which ever is earlier.

“the date on which the payment is made” shall be the date on which the payment is entered in the books of
accounts of the recipient or the date on which the payment is debited in his bank account, whichever is earlier.

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Issuance of Invoices under GST – 31 (3) (f)

 RTP has to issue consolidated invoice (Self invoice) at the end of the month in
respect of goods or services or both received by him from the supplier who is not
registered on the date of receipt of goods or services or both. [Rule 46 of CGST]

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Payment Voucher – S. 31(3)(g)

 RTP has to issue payment voucher at the time of making payment to the supplier.
PAYMENT VOUCHER
Details of Supplier Voucher Number :
Name : Voucher Date :
Address :
Place of Supply :
GSTIN/UIN : State :
State : State Code : State Code :

HSN CGST SGST IGST Amount Paid

Description of Product / Service Taxable Value
ACS Rate Amount Rate Amount Rate Amount (Rs.)

Advance Paid [in Words]:

Certified that the particulars given above are true and correct. Total Amount Before Tax
For, Name & Address of Supplier Add : CGST
Add : SGST
Add : IGST
Tax Amount : GST
Authorised Signatory Common Seal Total Amount After Tax
: -
: -
: -
: -
: -
: -
[ E&OE ]

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Entries in Returns GSTR – 1 and GSTR - 2

 RTP when discharging tax liability under RCM, no details to be filled in GSTR – 1.

Note: Table 4B
for supplies
attracting
Reverse Charge
Mechanism.

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Entries in Returns GSTR – 1 and GSTR - 2

 RTP when discharging tax liability under RCM, details to be filled in GSTR – 2.
Auto-
populated
from
GSTR –
2A

Note: Table 4
to capture
supplies
attracting
Reverse
Charge.
Manually
filled

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Details in Returns GSTR – 1 and GSTR - 2



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Credit of Taxes paid under RCM

 Every registered person shall, subject to such conditions and restrictions as may be
prescribed and in the manner specified in section 49, be entitled to take credit of
input tax charged on any supply of goods or services or both to him which are used
or intended to be used in the course or furtherance of his business and the said
amount shall be credited to the electronic credit ledger of such person. [S. 16(1)]

 Input Tax means – Section 2(62)

 IGST including that on import of goods;
 CGST, UTGST & SGST charged on any supply of goods or services;
 Tax payable under RCM;
 Tax payable when supplies are procured from URD;
 Excluding tax payable under composition scheme;

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Shah & Savla

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Chartered Accountants

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