Notification - Reverse charge under GST
GOVERNMENT OF INDIA MINISTRY OF FINANCE (Department of Revenue) 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, 2017 (12 of 2017):
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 five thousand rupees in a day.
This notification shall come into force with effect from the 1st day of July, 2017. [F.No.354/117/2017-TRU]
Following point are worth noting!!
1. The above notification has been issued by CG by exercising the power under section 9(4) of CGST ACT 2017
"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."
which means if a registered person receive goods/ services form any or all the supplier who is unregistered under GST and amount of such supplies exceeds 5000 in A DAY
for Exanple- if XYZ receives goods (not covered under zero rate) for 4000 from "YZ"- unregistered and also receives goods for Rs. 2000 from :XZ"- unregistered
In this case RCM will apply under section 9(4) read with notification. and GST will be on full amount. i.e on 6000/-
Know the following.
1. under section 9 (3) of CGST ACT 2017 - CG has power to specify certain goods/ service for which GST to be paid under RCM.
Extract of provision of section 9(3)
"9 (3) The Government may, on the recommendations of the Council, by notification, specify categories of supply of goods or services or both, the tax on which shall be paid on reverse charge basis by the recipient of such goods or services or both 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."
which means for these specified service - Service receiver has to pay Tax under RCM and claim Input Tax Credit if eligible.
2. if supplier of goods and services are unregistered then check the following.
(a) check whether such goods and services are covered under NIL rate of GST?
- if YES then no RCM
- if NO then Pay GST under RCM at the rate specified for goods / services.
NOTE:- Section 9(3) for registered supplier and for Specified services alone. Whereas section 9 (4) is for unregistered Supplier of goods or services.
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