RCM in GST

Hello Friends,

My this blog is related to tell you about RCM in GST. RCM means Reverse Charge Mechanism. The main points need to Remember in RCM. Let's start it:

Generally, GST is to be collected and deposited by the supplier of Goods and Services. But in some cases GST is to be collected and deposited by the purchaser/recipient of Goods and Services not by the Seller. This is called Reverse Charge Mechanism or RCM.

In the present scenario, RCM is applicable in Service Tax for services like Manpower supply, Goods and Transport Agency, Insurance Agent etc. Unlike Service Tax, there is no concept of partial reverse charge. The recipient has to pay 100% tax on the supply of Goods and Services. 

No partial reverse charge will be applicable under GST. 100% tax will be paid by the recipient if the reverse charge mechanism applies.

Important points to remember:

• Liability to collect and deposit GST to the Government has been shifts to Purchaser than Seller.

• If a purchaser buys a goods for the enhancement of his business than he can claim Input Tax Credit (ITC) on such purchases than seller. 

• But Composition dealers are not eligible for ITC neither in  normal tax scenario nor in RCM. 

RCM is applicable in the following cases:

• Supply of goods and Services notified by the government under Section 9(3).

• When registered person purchase goods/services from unregistered person as well as from composition dealers under Section 9(4).

For List of Goods & Services under RCM. Please click on the following Link:

https://drive.google.com/file/d/1QRuer-G8jBdBs3fJlDCFIeC8zUglpGCZ/view?usp=sharing

Why RCM under GST?

There are some reasons why RCM is required in GST. Here are some points:

• Where supplier of Goods or Services is unregistered person and he make supply of Goods or Services to a registered person.

• Where supplier of Goods or Services  is located in non taxable territory and person receiving the goods is located in taxable territory.

• Sometimes legislature may exempt specified goods or services from levy of tax but indirectly tax is levied on that sector under RCM.  

I hope it will be helpful to you.

Thanks & Regards

Kulvinder Kaur

B.Com(H), MBA (Finance)

9871580806, 8826566751

rightsteptoinvest@gmail.com