Registration

It is mandatory to get registration by receiver of goods or services or both if covered under provisions of Section 9(3) of CGST Act 2017, irrespective of threshold limit.

Time of Supply

It is important to note time of supply under reverse charge as it is different from forward charge.

In case of supply of goods, time of supply is earliest of:

1. date of receipt of goods; or
2. date of payment as per books of account or date of debit in bank account, whichever is earlier; or
3. the date immediately following thirty days from the date of issue of invoice or similar other document.

In the cases of supply of services, time of supply is earliest of:

1. Date of debit in bank account or date of payment as per books of account, whichever is earlier; or
2. Similar other document or the date immediately following sixty days from the date of issue of invoice.

Where it is not possible to determine TOS (time of supply) using above methods, the time of supply would be the date of entry in the books of account of the recipient.

Invoice and Payment Voucher

Under section 9(3) of CGST Act if supplies are made by registered supplier, there is no requirement of making self invoice by Recipient and Registered Supplier will issue Tax Invoice showing tax payable under reverse charge and payment of tax will be made by recipient. Second situation arise, if supply is made by unregistered supplier then recipient will make self invoice and pay tax.

Under section 9(4) registered recipient will make self invoice for the supplies received from unregistered supplier and will deposit tax with government.

Payment Voucher will be issued under all situations.

Rate and Payment of tax

Under RCM, regular GST Tax rate is applicable. It is very important to note that any amount payable under reverse charge shall be paid by debiting the electronic cash ledger.

Input tax credit

The recipient can avail Input Tax credit on the Tax amount paid under reverse charge on the supply of goods or services or both if the goods and services or both are used or will be used for business or furtherance of business. ITC can be availed in same month if not mentioned under negative list.

RCM Exemption

Under section 9(3) no exemption from RCM allowed except services received from GTAs who are opting 12% GST rate.

Under section 9(4) recipient of goods or services or both can avail exemption from tax payable under RCM uptoRs 5000 per day.

Advance Payment

Advance paid for reverse charge supplies is also leviable to GST. The person making advance payment has to pay tax on reverse charge basis.

Return

Finally challenge is to file correct return. Reverse Charge Transactions has to be specifically shown in monthly returns. Registered supplier falling under section 9(3) will fill table 4B and Table 13 of GSTR 1 and registered recipient will check auto populated table 4A of GSTR 2

Registered recipients covered under 9(3)or 9(4) will fill table 13 of GSTR 1 and table 4B of GSTR 2