GST is normally charged by Supplier of Goods/Services. But there are some cases where the Recipient will be liable to pay GST instead of Supplier. This structure of charging GST is called Reverse Charge Mechanism (RCM).
Provisions of Sec 9(3) & Sec 9(4) of CGST Act are applicable for RCM
Under Sec 9(3) following Goods and Services are notified by CBIC which will be covered under RCM.
a. Notified Goods for RCM: -Cashew nuts, not shelled or peeled, -Bidi wrapper leaves (tendu), -Tobacco leaves, -Silk yarn, -Raw Cotton, -Supply of lottery, -Used vehicles, seized and confiscated goods, old and used goods, waste and scrap, -Priority Sector Lending Certificate
b. Notified Services for RCM: –Services by Goods transportation Agency (GTA) -Services Provided by Advocates to Business Entity -Services Provided by Arbitral Tribunal to Business entity –Sponsorship service to any Body corporate/Firm -Services provided By Central Govt./State Govt./UT/Local Authority to Business Entity -Services provided by Director of a Company -Services Provided by Insurance Agents -Services Provided by Recovery Agents to a Banking co./NBFC -Supply of services by an author, music composer, photographer, artist or the like to s to a publisher, music company, producer or the like. -Supply of services by the members of Overseeing Committee to RBI
Sec 9(4) The Government may, notify a class of registered persons who shall, in respect of supply of specified categories of goods or services or both received from an unregistered supplier, pay the tax on reverse charge basis
Sec 9(4) is applicable only to selected categories of registered persons & Goods and services which has to be notified by the Government.
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