Reverse charge under GST Act

Reverse charge, where the recipient is liable to pay tax instead of service provider/seller.The concept of reverse charge mechanism is already present in service tax. In GST regime, reverse charge may be applicable for both services as well as goods.The purpose of this charge is to increase tax compliance and tax revenues. 

One of most discussed provisions of GST is that reverse charge on  goods/services supplied by Unregistered dealer  to a registered dealer.Here composite dealer shall be treated as Registered dealer.

In above case, the registered dealer has to pay GST on the supply. But now Govt has given two exemption for this clause.

1.     If a person registered under GST only for deduction of TDS/TCS then reverse charge from supply of goods and services shall not apply on such person.

2.     Further Cut off amount of 5000/- per day has been allowed to registered person.

3.     Exemption from reverse charge has been given to registered person on purchase of second hand goods from unregistered person subject to the condition that buyer will pay GST on its subsequent sales. 

Note :The below notification has used intra state supply as unregistered dealer cannot supply good/services inter state.

[TO BE PUBLISHED IN PART II, SECTION 3, SUB-SECTION (i) OF THE GAZETTE OF INDIA, EXTRAORDINARY] 

GOVERNMENT OF INDIA 

MINISTRY OF FINANCE 

(Department of Revenue) 

Notification No.9/2017-Union Territory Tax (Rate) 

New Delhi, the 28th June, 2017 G.S.R. (E).- 

In exercise of the powers conferred by sub-section (1) of section 8 of the Union Territory Goods and Services Tax Act, 2017 (14 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 intraState supplies of goods or services or both received by a deductor under section 51 of the Central Goods and Services Tax Act, 2017 (12 of 2017), from any supplier, who is not registered, from the whole of the Union Territory tax leviable thereon under sub-section (4) of section 7 of the said Union Territory Goods and Services Tax Act, subject to the condition that the deductor is not liable to be registered otherwise than under sub-clause (vi) of section 24 of the said Central Goods and Services Tax Act read with section 21 of the said Union Territory Goods and Services Tax Act. 

2. This notification shall come into force with effect from the 1 st day of July, 2017. [F.No.354/117/2017-TRU] (Mohit Tewari) Under Secretary to the Government of India

[TO BE PUBLISHED IN PART II, SECTION 3, SUB-SECTION (i) OF THE GAZETTE OF INDIA, EXTRAORDINARY] 

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.

2. This notification shall come into force with effect from the 1st day of July, 2017.

[F.No.354/117/2017-TRU] (Mohit Tewari) Under Secretary to the Government of India

[TO BE PUBLISHED IN PART II, SECTION 3, SUB-SECTION (i) OF THE GAZETTE OF INDIA, EXTRAORDINARY] 

GOVERNMENT OF INDIA 

MINISTRY OF FINANCE 

(Department of Revenue) Notification 

No.10/2017-Union Territory Tax (Rate) New Delhi, the 28th June, 2017 

G.S.R. (E).- In exercise of the powers conferred by sub-section (1) of section 8 of the Union Territory Goods and Services Tax Act, 2017 (14 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 second hand goods received by a registered person, dealing in buying and selling of second hand goods and who pays the Union territory tax on the value of outward supply of such second hand goods as determined under sub-rule (5) of rule 32 of the Central Goods and Services tax Rules, 2017, from any supplier, who is not registered, from the whole of the Union territory tax leviable thereon under sub-section (4) of section 7 of the Union Territory Good and Services Tax Act, 2017 (14 of 2017). 

2. This notification shall come into force with effect from the 1st day of July, 2017. [F.No.354/117/2017-TRU] (Mohit Tewari) Under Secretary to the Government of India