Recently government has notified two important notifications w.r.t. reverse charge mechanism under new Goods & Services Tax Regime.
First, Notification no. 5/2017- Central Tax dated 19 June 2017: Seeks to exempt persons only engaged in making taxable supplies, total tax on which is liable to be paid on reverse charge basis.
Through this notification the persons who are only engaged in making taxable supply of goods or services or both, the total tax on which is liable to be paid on reverse charge basis by the recipient of such goods or services or both under sub-section (3) of section 9 of CGST ACT 2017 are not required to take registration under GST.
This notification is applicable from 22nd June 2017.
NB: This notification do not cover cases which fall under sub-section (4) of section 9, as the same deals with the supply of goods or services by an unregistered person to a registered person whereas sub-section (3) of section 9 deals with those cases that are notified by Government through notification whether the supplier or recipient are registered or not.
Further the Second notification which is Notification No. 08/2017- Central Tax (Rate) dated 28th June 2017: it exempts intra-State supplies of goods or services or both received by a registered person from any supplier, who is not registered, from the whole of the central tax leviable thereon under sub-section (4) of section 9 of the CGST ACT 2017.
Provided that the said exemption shall not be applicable where the aggregate value of such supplies of goods or service or both received by a registered person from any or all the suppliers, who is or are not registered, exceeds Rs 5,000/- in a day.
This notification is applicable from 1st July 2017. The notifications can be accessed at www.cbec.gov.in website.