Table of Contents
What is the rule of reverse charge?
Reverse Charge Mechanism is the process of payment of GST by the receiver instead of the supplier. In this case, the liability of tax payment is transferred to the recipient/receiver instead of the supplier.
Which services are covered under reverse charge mechanism?
SERVICES UNDER REVERSE CHARGE AS APPROVED BY GST COUNCIL
| Sl. No. | Provider of service | Percentage of service tax payable by service provider |
|---|---|---|
| 1 | Any person who is located in a nontaxable territory | Nil |
| 2 | Goods Transport Agency (GTA) | Nil |
| 3 | An individual advocate or firm of advocates | Nil |
| 4 | An arbitral tribunal | Nil |
What is partial reverse charge in service tax?
With effect from 1 July, 2012, there are certain services on which 100% service tax needs to be paid. by Service Recipient and there is partial reverse charge wherein both service provider and service. recipient needs to pay service tax as per defined percentage as mentioned in the table below:- S.
What is reverse charge mechanism with example?
Example – A trader who is registered in GST takes services of Goods Transport Agency (GTA) for Rs. 10,000. This service is listed under the reverse charge list therefore trader has to pay tax @ 18% on Rs. 10,000 on RCM.
On which goods reverse charge is applicable?
If you supply certain goods that have been listed out by the Central Board of Indirect Taxes & Customs (CBIC), then the reverse charge is applicable. Some of these goods include cashew nuts, betel leaves, silk yarn, tobacco leaves, and so on.
What is the limit of RCM on transportation?
5,000 per day. Therefore if a total purchase of less than Rs. 5,000 is made in one day from unregistered person then there is no requirement to pay tax on RCM. This limit is total of Rs.
Is ITC applicable on reverse charge?
Any amount payable under reverse charge shall be paid by debiting the electronic cash ledger. In other words, reverse charge liability cannot be discharged by using input tax credit. However, after discharging reverse charge liability, credit of the same can be taken by the recipient, if he is otherwise eligible.
Is RCM applicable on exempted goods?
If supply is exempted, nil rated or non-taxable, RCM does not apply in such a case. Recipient of goods or services discharges GST under RCM as if he is the person liable for paying the tax on supply procured by him.
Is RCM applicable on professional services?
RCM is not applicable to above professional services (except Legal Services provided by Advocate under Notification No. 13/17-CR(Rate) dated 28.6.
Is reverse charge mechanism only applicable to services?
Reverse Charge Mechanism (in case of supplies made by unregistered persons to registered persons) will apply, starting from 1st Feb 2019, only on specified goods/services and specified persons.
Is RCM applicable on carriage outward?
ITC of tax paid under RCM towards GTA services availed both on account of (inward supply of goods from the supplier or outward supply of goods to the customer) shall be allowed to such person.
When can RCM inputs be claimed?
8. Can we claim ITC on RCM in same month? Yes, you can claim the Input Tax Credit on RCM in the same month, when you paid the GST under RCM.
Is RCM applicable on import of services?
RCM Applicability on Import of Service As per Notification no. 10/2017 Income Tax, GST is applicable under RCM on import of service if the service is supplied by a person located in non-taxable territory to any person who is located in the taxable territory.
Is RCM applicable on repair and maintenance?
because in RCM Repairs and Maintenance service is not covered.
Is RCM applicable on loading and unloading charges?
Loading and unloading expenses come under GST for all the goods except the agricultural goods. Under Reverse Charge Mechanism, after crossing the exception amount of 5000, GST rate on loading and unloading labour is 18% (9+9).
Is ITC available on RCM?
Input Tax Credit under RCM A supplier cannot take Input Tax Credit of GST paid on goods or services used to make supplies on which the recipient is liable to pay tax under reverse charge. The recipient can avail Input Tax Credit of GST amount that is paid under reverse charge on receipt of goods or services by him.
What is reverse charge mechanism in service tax?
Reverse charge mechanism is not a new concept in service tax. Under the reverse charge mechanism, instead of service provider, the service receiver is liable to pay service tax. In that case, the service receiver will register himself with service tax authorities and file the required returns.
What is partial reverse charge under normal course?
Under the reverse charge mechanism, there is no option to service provider to pay Service Tax on his own as under normal course. Also, under partial reverse charge, the law does not provide the option of discharging Service Tax liability either by service provider or by service receiver.
Who is liable to pay partial reverse charge under service tax?
Under Partial Reverse charge mechanism both service provider and service receiver are jointly made liable to pay service tax. The details of Reverse charge in respect of 15 services provided or to be provided are as under:
What is Cenvat credit under reverse charge?
CENVAT CREDIT OF TAX PAID UNDER REVERSE CHARGE MECHANISM For service receiver who has paid service tax under reverse charge it is the service tax paid on the Input service. Hence Cenvat Credit is available but he will be eligible to avail credit, on the basis of GAR-7 challan i.e on the date when service tax is paid.