Reverse Charge in GST – The provider of products or services generally pays the supply fee. The recipient becomes responsible for paying the tax in the event of Reverse Charge, i.e. the changeability is reversed.
When is Reverse Charge in GST Applicable?
A. Supply from an Unregistered dealer to a Registered dealer
If a seller is not registered under GST provides products to an individual who is registered under GST, the Reverse Charge applies. This indicates that, regardless of the vendor, the GST would have to be billed straight to the government by the recipient.
For the transactions conducted, the licensed dealer that has to pay GST underneath the reverse charge would have to do self-invoicing.
The consumer will have to pay IGST for inter-state sales. The buyer will have to pay CGST and SGST within RCM for intra-state transactions.
B. Services through an e-commerce operator
If an e-commerce business provides services, therefore the e-commerce owner would be subject to a reverse charge. He’ll be responsible for paying GST.
UrbanClap, for example, offers facilities for plumbers, electricians, educators, etc. UrbanClap is responsible for paying GST rather than the registered service providers and receiving this from the users.
If an e-commerce provider has no physical location within the taxable area, the person who represents that the e-commerce operator is subject to tax for any reason whatsoever.
If no owner exists, the operator will nominate an individual who’ll be considered accountable for paying GST.
C. Supply of certain goods and services specified by CBEC
A list of products and a list of facilities to which the reverse fee relates has been provided by CBEC.
Time of Supply under Reverse Charge
A. Time of supply in the case of products
The delivery timing must therefore be at the soonest of the mentioned date in the event of a reverse charge:
- The date of approval of the products
- The payment date
- A day instantly following 30 days from the date on which the supplier received an invoice.
Where the time of delivery can not be determined, the date of delivery indicating the date of entering as in accounting records of the recipient.
B. Supply Time in the case of services
The delivery time should be at the latest of the below days in the event of a reverse charge:
- The date on which payment was made
- A date shortly after sixty days from the date of issuance by both the supplier of the bill
If this is not feasible to ascertain the time of delivery, the time of delivery indicating the date of registration into the accounts of the receiver.
What is Self Invoicing?
Self-invoicing ought to be performed once you have bought products or services via an unauthorized vendor and the procurement of goods or services is subject to a reverse charge.
This is because the vendor could not give a GST-compliant bill to you and you are thus responsible for paying taxes on their part. Self-invoicing, therefore, seems essential in this situation.