Reverse Charge Mechanism (RCM) under GST further Deferred/ Suspended till 30 Sept. 2019, notifies CBIC
CBIC has notified that the provisions relating to Reverse Charge Mechanism (RCM) under GST, i.e. under Section 9(4) of the CGST Act, 2017, Section 5(4) of the IGST Act, 2017 and Section 7(4) of the UTGST Act, 2017 have been further Deferred/ Suspended by Govt. by 1 year, i.e. from 30 Sept. 2018 to 30 Sept. 2019. Earlier, the CBEC/ CBIC had notified on 13 Oct. 2017/ 23 March 2018/ 29 June 2018 that implementation of RCM under GST has been deferred upto 31 March 2018/ 30 June 2018/ 30 Sept. 2018 respectively.
| Still there is ‘NO’ change in RCM provisions u/s 9(4): CBIC Rescinds RCM Exemption on Purchases from Unregistered Dealers upto Rs. 5,000 |
It may be noted that the GST Council has recommended in it’s 28th Meeting held at New Delhi on 21st July 2018 to defer the provisions relating to Reverse Charge Mechanism (RCM) under GST for further one year upto 30 Sept. 2019. Also GST Council has recommended to restrict the scope of provisions relating to RCM under GST to supply of specified goods only.
Further, it may be noted that there is no change on reverse charge provisions under Section 9(3) of CGST/ SGST Acts, Section 7(3) of UTGST Act and Section 5(3) of the IGST Act, relating to GTA, Legal Services provided by an Advocate, etc. and for that reason only it’s called to be a partial suspension of RCM.
This partial suspension of RCM is basically meant for convenience of large taxpayers and survival of unregistered taxpayers. It will provide an opportunity to such taxpayers with more time to be familiar with the compliance requirements. Meanwhile the Government will also be able to streamline the relevant procedures. In fact large/ registered businesses were reluctant to make compliance/ pay tax on behalf of small/ unregistered businesses and they were avoiding to do business with them. This will benefit small businesses and substantially reduce compliance costs.
Key Recommendations of 28th GST Council Meeting (dt. 21 July 2018)
Reverse Charge Mechanism (RCM) under GST further Deferred/ Suspended till 30 Sept. 2018: CBIC Notifications
CBIC has notified that the provisions relating to Reverse Charge Mechanism (RCM) under Section 9(4) of the CGST Act, 2017, Section 5(4) of the IGST Act, 2017 and Section 7(4) of the UTGST Act, 2017 have been further Deferred/ Suspended by Govt. for 3 months upto 30 Sept. 2018. Earlier, the CBEC/ CBIC had notified on 13 Oct. 2017/ 23 March 2018 that implementation of these provisions has been deferred upto 31 March 2018/ 30 June 2018 respectively.
Reverse Charge Mechanism (RCM) under GST further Deferred/ Suspended till 30 June 2018: CBEC Notifications
The CBEC has notified that the RCM provisions have been further deferred/ suspended till 30 June 2018, in line with GST Council recommendations dt. 10 March 2018. In the meantime, a Group of Ministers (GoM) will look into the modalities of its implementation to ensure that no inconvenience is caused to the trade and industry.
RCM Suspended till 30 June 2018: CBEC Notification 10/2018 Central Tax Rate dt. 23 March 2018
RCM Suspended till 30 June 2018: CBEC Notification 11/2018 Integrated Tax Rate dt. 23 March 2018
RCM Suspended till 30 June 2018: CBEC Notification 10/2018 UT Tax Rate dt. 23 March 2018
Partial Suspension of ‘Reverse Charge Mechanism (RCM) under GST till 31 March 2018: CBEC Notifications
GST Council, in its 22nd Meeting dt. 6 Oct. 2017, has recommended that the reverse charge mechanism (RCM) shall remain deferred/ suspended till 31.03.2018 and will be reviewed by a committee of experts.
Accordingly, the CBEC has notified suspension of Reverse Charge Mechanism (RCM) till 31 March 2018 under Section 9(4) of the CGST Act, 2017, Section 5(4) of the IGST Act, 2017 and Section 7(4) of the UTGST Act, 2017. There is nothing in the Notification on the effective date of RCM suspension. However GSTN has tweeted on 12 Oct. 2017 that the RCM Suspension will be applicable w.e.f. the date of Notification (i.e. 13 Oct. 2017).
RCM Suspended till 31 March 2018: CBEC Notification 38/20117 Central Tax Rate dt. 13 Oct. 2017
G.S.R.1262(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 makes the following amendment in 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, Part II, Section 3, Sub-section (i), vide number G.S.R. 680(E), dated the 28th June, 2017, namely:-
In the said notification, the proviso under Paragraph 1 shall be omitted.
2. The exemption contained in the notification No. 8/2017-Central Tax (Rate) dated the 28th June, 2017 as amended by this notification shall apply to all registered persons till the 31st day of March, 2018.
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.
RCM Suspended till 31 March 2018: CBEC Notification 32/20117 Integrated Tax Rate dt. 13 Oct. 2017
RCM Suspended till 31 March 2018: CBEC Notification 38/20117 UT Tax Rate dt. 13 Oct. 2017
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It’s really a good step taken by the GST Council by suspending RCM. Small Businesses are really suffering, because of all registered persons reluctant to purchase from them.
RCM is deferred but is applicable from when? September 2017 or October 2017?
From date of notification i.e. 13th Oct 2017.
RCM applies even now on Lawyers?
No change on reverse charge provisions under Section 9(3) of CGST/ SGST Acts and Section 5(3) of the IGST Act, relating to GTA, Legal Services provided by an Advocate.
RCM applies on goods or services notified under section 9(3) e.g GTA, Advocate fees, etc. This is still applicable and is NOT suspended.
RCM has been suspended only because of lack of knowledge to small traders and lot of confusions. How it is possible to the small traders to maintain RCM from 01-07-2017 to 13-10-2017. This type of notifications will create lot of confusions between traders and officials in future.
Is RCM applicable on freight charges?
YES, RCM IS APPLICABLE ON FREIGHT SERVICES, ADVOCATE FEES AND DIRECTOR SITTING FEES AFTER 13.10.2017 BUT OTHER THAN SERVICES NOT APPLICABLE UNDER GST REGIME TILL 31.03.2018 AS PER CBEC NOTIFICATION NO.38/20117 ISSUED BY GST COUNCIL.
IS LIABILITY TO PAY GST AFTER SUSPENSION OF RCM IS ON TRANSPORTER?
IS RCM APPLICABLE ON AUDIT FEES OR ACCOUNTING CONSULTANCY PAID BY A REGISTERED DEALER TO AN UNREGISTERED CA OR A CONSULTANT?
We are not paying reverse charge from oct’ 2017. Is “Rule 42 and 43 of CGST/SGST” applicable for us?
If a registered dealer purchase goods from an unregistered dealer then the registered dealer will pay RCM or not ??
IF FREIGHT IS SHOWN “TO PAY” IN LR AND NO GST ON GTA IS CHARGED IN INVOICE OF MATERIAL.. THEN WHAT WILL BE THE LIABILITY OF REVERSE CHARGE?
5% of “to pay” amount if RCM in force. But since RCM has been suspended till 31st March 2018, liability for consignee till such time is nil. However, the GTA will be required to pay 5% GST from its own pocket on the basis of turnover.
Any other income receivables is liable for RCM, such as brokerage and others.
If we have purchased material from unregistered dealers. Is RCM applicable??
Is RCM applicable on Raw cotton?
RCM is applicable on inward services, like payment to unregistered labour contractor?
IS RCM APPLICABLE ON COMMISSION OR BROKERAGE BILL RAISED BY PERSON OR UNREGISTERED FIRM ?
is urd purchase of cotton is still suspended? can we not pay tax on it?
Is RCM applicable on freight charges now?
Who pays GST on services provided by life insurance agents (URD) to insurance companies (RD). Can insurance companies deduct GST from agent’s commission?
We are getting our product trial in Trial Field of Ministry of Defence (DGQA), they are charging for each trial. We need to pay the trial charges to DGQA. Whether RCM will be applicable as per latest circular?
Is RCM applicable on Ac repairing invoice?
IS RCM applicable for payment to high commission of any country like Scotland, Canada, etc. towards participation cost in any event, roadshow etc, such activities.
I purchased a second hand vehicle from govt. department. Both parties have their own GST number. I paid GST @18% under RCM in Oct. 2018 and submitted the challan to the govt deptt. After accepting the challan now they are asking that challan should have their GST number and not mine, since GST paid by my number can be refunded to me. I have few concerns:
1) Can i pay the GST under RCM if both are registered vendor and having GST number
2) Can i get the refund of GST paid to government and how much time it will take to get the refund.
3) How should i apply for the refund
4) If i cant get the refund of the amount then will my amount get wasted
5) How will govt department has to raise the invoice to me
6) How do the govt department will file the monthly return and how should they show such transaction for which GST is under RCM
7) What about the input tax credit.
Is RCM applicable on Fees for Marketing and Communication Activities Services Rendered?
Like this sudden notification knowledge not reached the uneducated soon, Kindly take a step to reach all at once.,
whether RCM applicable to registered labour contractor. Previous bill received from contractor including GST 18%. Please conform who will pay GS for January – 2019? i.e. RCM to be paid by Labor Contractor or Factory?
From which date the RCM Under GST is applicable in India?
I m a registered person and i use security services and they gave me a bill they are registered and they told to claim RCM is it possible?
what is the effective date of RCM? is it applicable from 1st Feb 2019? or it remains suspended upto sep 2019?