Reverse Charge Mechanism in GST

 

Meaning of Reverse Charge

 

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.

 

Summary on Reverse Charge Mechanism

 

 

Reverse Charge Mechanism in GST

 

Type 1

Type 2

Type 3

What is liable?

 

Notified categories of supply of goods or services or both.

 

 

Supply of taxable goods or services or both.

 

Notified categories of services.

 

Who is liable?

 

Recipient of such goods or services or both.

 

 

Registered Person who is recipient.

 

Electronic Commerce Operator.

 

When does the liability arise?

 

Earliest of the following dates:  receipt of goods/ payment as per books/ payment debited as per bank account/ the date immediately following 30 days (60 days in case of services) from the date of issue of invoice.

 

 

How to pay?

No Input tax credit is allowed to be used for payment of tax under Reverse Charge Mechanism, so it can be paid through Cash mode only.

 

 

ITC of tax paid under RCM

 

Tax paid under RCM is available as ITC to registered recipient person, unless there is otherwise specifically mentioned restriction for categories of supply.

 

 

What if no payment to supplier within 180 days

 

Even if no payment to supplier is made within 180 days, then also the Input Tax Credit can be availed on it as it is excluded from that provision.

 

 

 

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