Reverse Charge in GST: In the earlier law, there was no provision for payment of excise duty or Value Added Tax under Reverse Charge. Section 68(2) of the Finance Act had provision for payment of service tax under Reverse Charge. Notification No. 30/2012 dt. 20.06.2012 prescribed various taxable services wherein the recipient is liable to pay the tax under reverse Charge. Major services covered under RCM were – Insurance / Recovery / Marketing Agents, Goods Transport Agency, Sponsorship, Directors services etc.
Section 9(3) of the CGST Act has provisions regarding payment of tax on supply of goods and or services on reverse charge. Further Section 9(4) of the CGST Act has a provision that any supply of goods and/or services by an unregistered supplier to a registered supplier, the tax thereon shall be paid by the registered recipient. Regarding provisions relating to reverse charge in respect of intra-state goods and services received from unregistered suppliers, it can be stated that these provisions are complicated and tax payers faced numerous difficulties in collecting the data for this purpose and pay tax in time. Hence, the Government has withhold these provisions till 30th June, 2018.
Reverse Charge in GST
The provisions in GST are much more complicated. Section 9(3) of the CGST Act has provisions regarding payment of tax on supply of goods and or services on reverse charge. Further Section 9(4) of the CGST Act has a provision that any supply of goods and or services by an unregistered supplier to a registered supplier, the tax thereon shall be paid by the registered recipient.
As per Notification 13/2017 Central Tax (Rate) dt. 28.06.2017 major services which are covered under reverse Charge are – Goods Transport Agency, Advocates, Sponsorship, Director Services, Insurance Agents etc. As compared with the earlier services, Manpower Supply, Works Contract Service and Rent a cab service are not included under Reverse Charge in GST. Services by Author, music Composer are newly added in GST.
In GST, for Reverse Charge the earlier confusions have been eliminated. The entire tax is to be paid by the service recipient and no differentiation of the status of the assessee is relevant.
Regarding provisions relating to reverse charge in respect of intra-state goods and services received from unregistered suppliers, it can be stated that these provisions are complicated and tax payers faced numerous difficulties in collecting the data for this purpose and pay tax in time. Hence, the Government has withhold these provisions till 30th June, 2018.
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