CBIC Rescinds RCM Exemption on Intra-state Purchases of Goods and Services from Unregistered Dealers upto Rs. 5,000 per day
CBIC has notified that Exemption from tax under ‘Reverse Charge Mechanism (RCM)’ under GST stands rescinded w.e.f. 1 Feb. 2019 in respect of Intra-state Purchases of Goods and Services from Unregistered Dealers (of value upto Rs. 5,000 per day), in view of bringing into effect of the amendments (regarding RCM on supplies by unregistered persons) in the Amended CGST/ IGST/ UTGST Acts 2018.
However, it may be noted that this Notification has nothing to do with restoring the RCM provisions u/s 9(4) of the CGST Act, 2017 w.e.f. 1 Feb. 2019 which were kept in abeyance till 30 Sept. 2019 vide CGST Notification 22/2018 dt. 6 Aug. 2018, in view of the fact that provisions of CGST Amendment Act, 2018 have been effected from 1 Feb. 2019. Amended provisions of Section 9(4) of the CGST Act, 2018 provides as under:
The Government may, on the recommendations of the Council, by notification, specify a class of registered persons who shall, in respect of supply of specified categories of goods or services or both received from an unregistered supplier, pay the tax on reverse charge basis as the recipient of such supply of goods or services or both, and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to such supply of goods or services or both.”.
Accordingly, there is no change in RCM provisions u/s 9(4) due to applicability of amended CGST Act, 2018 as stated above, since CBIC is yet to notify the specified categories of goods or services supplied by unregistered persons to a specified class of registered taxpayers, based on recommendations of GST Council, on which GST shall be payable under Reverse Charge Mechanism (RCM).
To summarise, we can say that the CBIC has rescinded the Notification No. 8/2017-Central Tax (Rate) dt. 28 June 2017 in view of bringing into effect the amendments (regarding RCM on supplies by unregistered persons) in the GST Acts w.e.f 1 Feb. 2019, i.e. Amended Section 9(4) to be applicable only for specified class of registered persons since original section has been omitted/substituted for trade facilitation. Key issue which remains is that ‘the class of persons/ goods/ services for whom/ which section 9(4) shall be applicable are yet to be notified and till then RCM under Section 9(4) remains deferred.
CBIC Notification No. 1/2019 (Central Tax Rate) dt. 29 Jan. 2019
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 rescinds the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 8/2017-Central Tax (Rate), dated the 28th June, 2017, published in the Gazette of India, Extraordinary, vide number G.S.R. 680 (E), dated the 28th June, 2017, except as respects things done or omitted to be done before such rescission.
2. This notification shall come into force with effect from the 1st day of February, 2019.
Note:- The principal notification No. 8/2017- Central Tax (Rate), dated the 28th June, 2017, was published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 680 (E), dated the 28th June, 2017 and was last amended vide notification No. 22/2018-Central Tax (Rate), dated the 6th August, 2018, published vide number G.S.R. 743 (E), dated the 6th August, 2018.
CBIC Notification No. 1/2019 (Integrated Tax Rate) dt. 29 Jan. 2019
G.S.R. (E).- In exercise of the powers conferred by sub-section (1) of section 6 of the Integrated Goods and Services Tax Act, 2017 (13 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 rescinds the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 32/2017-Integrated Tax (Rate), dated the 13th October, 2017, published in the Gazette of India, Extraordinary, vide number G.S.R. 1263 (E), dated the 13th October, 2017, except as respects things done or omitted to be done before such rescission.
2. This notification shall come into force with effect from the 1st day of February, 2019.
Note:- The principal notification No. 32/2017- Integrated Tax (Rate), dated the 13th October, 2017, was published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 1263(E), dated the 13th October, 2017 and was last amended vide notification No. 23/2018-Integrated Tax (Rate), dated the 6th August, 2018, published vide number G.S.R. 744 (E), dated the 6th August, 2018.
CBIC Notification No. 1/2019 (UT Tax Rate) dt. 29 Jan. 2019
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 rescinds the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 8/2017- Union Territory Tax (Rate), dated the 28th June, 2017, published in the Gazette of India, Extraordinary, vide number G.S.R.717 (E), dated the 28th June, 2017, except as respects things done or omitted to be done before such rescission.
2. This notification shall come into force with effect from the 1st day of February, 2019.
Note:- The principal notification No. 8/2017- Union Territory Tax (Rate), dated the 28th June, 2017, was published in the Gazette of India, Extraordinary, Part II, Section 3, Subsection (i), vide number G.S.R.717 (E), dated the 28th June, 2017 and was last amended vide notification No. 22/2018- Union Territory Tax (Rate), dated the 6th August, 2018, published vide number G.S.R. 745 (E), dated the 6th August, 2018.
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Reverse Charge Mechanism (RCM) under GST Suspended till 30 Sept. 2019, notifies CBIC
what if i avail service from unregistered dealer from other state? how rcm will be applicable?
Mere reading of Notification No. 01/2019–Central Tax (Rate), Any one can conclude oh, RCM on purchase from unregistered suppliers shall have to be paid by registered dealer who purchases.
But it is not so, Why? Read it:
The notification of exemption is rescinded as it is not needed now since section 9(4) it self has been amended to the effect that there would be no RCM for purchase of goods/services unless government wants to levy by notification. This has been effected vide CGST amendment Act 2018 (31 of 2018) which is effective from 1st Feb 2019
RCM for specific goods/services under Section 9(3) remains.
While in two meetings before last it had been concluded by GST council to remove RCM under section 9(4).
@Jitender: Thanks for the valuable feedback.
The fundamental and basic idea of bring GST is to simplify in such a way that even a lay man can file the return easily. All the assesses were little bit happy that RCM was suspended till Sep 19.Again implementation of RCM is somewhat unhappy. All the small and medium traders were expecting that RCM will be eliminated totally from OCT19. What is the logic behind the RCM payment and taking credit in the next month. it seems to meening less.
Instead of this RCM GST council may ask to submit a list of Purchases or expenses from a unregistered person along with their PAN number & Bank account number. This will facilitate the Council to monitor the Total turnover of unregistered persons over the period of years and bring them in GST