Sec 2(98) – Reverse charge

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Sec 2(98) – Reverse charge 2017-04-14T03:25:21+00:00
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    “reverse charge” means the liability to pay tax by the recipient of supply of goods or services or both instead of the supplier of such goods or services or both under sub-section (3) or sub-section (4) of section 9, or under sub-section (3) or sub- section (4) of section 5 of the Integrated Goods and Services Tax Act;

    Priya MadrechaPriya Madrecha
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    The scheme of payment of tax under reverse charge mechanism would prevail under the GST Law, as is existent in specific cases of services, and in case purchases from unregistered dealers under the VAT law. However, in the GST law, the scope of reverse charge is expanded to include:
    (a)    Goods (in addition to services) that may be notified, even if the supplier is registered;
    (b)    Services (in addition to goods), for taxation on reverse charge basis where the supplier is unregistered, and the recipient is registered.
    The following aspects need to be noted:
    •    The scheme of partial reverse charge of joint charge, currently prevailing under the Service tax laws would be discontinued;
    •    Persons required to pay tax under reverse charge are required to obtain registration under the GST whether or not they make any outward supplies, and without having regard to the threshold limits for registration – in case of notified goods and services;
    •    Composition suppliers being recipients of supplies on which tax is payable on reverse charge basis, will have to remit tax at the applicable rates, and not the concessional composition tax rates;
    •    The recipient paying tax on reverse charge basis, should issue a ‘payment voucher’ at the time of making paying to the supplier;
    •    The recipient paying tax on reverse charge basis on account of effecting inward supplies from unregistered persons, should issue an invoice in respect of the goods or services inwarded, at the time of receipt of such goods or services.

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