What is GST Reverse Charge?

Generally, the supplier of goods or services is liable to pay GST. But in some cases, like imports and other supplies, the liability is on the recipient under the reverse charge mechanism. Reverse charge means the liability to pay tax is on the recipient of supply of goods or services instead of the supplier of such goods or services in respect of notified categories of supply.

If a vendor who is not registered under GST, supplies goods to a person who is registered under GST, then Reverse Charge would apply. This means that the GST will have to be paid directly by the receiver to the Government instead of the supplier.

The registered dealer who has to pay GST under reverse charge has to do self-invoicing for the purchases made.

All taxpayers required to pay tax under reverse charge have to register for GST and the threshold of Rs 20 Lakhs is not applicable to them.

A person who is required to pay tax under reverse charge has to compulsorily register under GST. Every registered person is required to keep and maintain records of all supplies attracting payment of tax on reverse charge.

1. What does it mean by the

   GST reverse charge

   ?GST reverse charge or GST reverse charge mechanism refers that GST to be paid and submitted with the government by the recipient of goods or services rather than the supplier of goods and services.
2. Who is liable to pay GST reverse charge?Under Section 9(4) of the CGST Act, if a registered individual buys goods and services from a dealer who is unregistered, then then the former has the pay GST on a reverse charge basis.
3. Does GST TDS implement on the reverse charge mechanism?No, TDS is not applicable when the supplier is unregistered and the recipient is not liable to pay GST under the RCM (reverse charge mechanism) as per Section 9(4) of the CGST Act, 2017.
4. Is the GST reverse charge mandatory?In accordance with Section 24 of the CGST Act, 2017, an individual paying tax under the reverse charge mechanism has to mandatorily get registered despite the turnover being less than the threshold limit.

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