CBIC Rescinds RCM Exemption on Purchases from Unregistered Dealers upto Rs. 5,000

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CBIC has notified that Exemption from tax under ‘Reverse Charge Mechanism (RCM)’ under GST stands rescinded w.e.f. 1 Feb. 2019 in respect of Intra-state Purchases of Goods and Services from Unregistered Dealers (of value upto Rs. 5,000 per day), in view of bringing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To summarise, we can say that the CBIC has rescinded the Notification No. 8/2017-Central Tax (Rate) dt. 28 June 2017 in view of bringing into effect the amendments (regarding RCM on supplies by unregistered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.

Related Posts:

Reverse Charge Mechanism (RCM) under GST Suspended till 30 Sept. 2019, notifies CBIC

4 Comments

  1. Jaipal Solanki
  2. JITENDER KUMAR RANKA
  3. Kushish
  4. S Padmanaban

Leave a Reply

Get ‘CA Club Updates’ Newsletter via Daily Email

Subscribe for our Newsletter ‘CA Club Updates’ delivered thru Google Feedburner Emails and join our community of 6000 plus subscribers. To join, please click on the ‘SUBSCRIBE’ link below:

SUBSCRIBE

Upon clicking the link, a pop-up window will open. Please fill up your email id and verification code therein. After that check your email and click the confirmation link sent by Feedburner Email subscription.

This one time process is to ensure that you don’t get emails without your own confirmation, i.e. someone else can’t register your email here. Besides, each Newsletter will include an ‘Unsubscribe’ link to maintain your freedom to discontinue getting emails anytime.