Gst under rcm
This query is : Resolved
21 August 2017
IF A PERSON PAYS WEAVING WAGES RS 10000.00 TO A REGD PERSON ON 1ST AUG-2017 AT THE SAME TIME HIS DAILY EXP. ON 1ST AUG 2017 IS 4500.00 FROM URD SUPPLY. WHETHER HE IS LAIBLE TO PAY GST ON RS. 4500.00 UNDER RCM. BECAUSE TOTAL EXP. PAID IS MORE THAN 5000.00 IN A PARTICULAR DAY (BOTH REGD. SUPPLY+URD SUPPLY)
22 August 2017
kindly reply
27 July 2024
In the context of GST under Reverse Charge Mechanism (RCM), your query involves the applicability of RCM on expenses related to both registered and unregistered suppliers. Here’s a detailed breakdown:
### **1. RCM on Unregistered Suppliers**
Under GST, the Reverse Charge Mechanism (RCM) applies when a registered person makes purchases from unregistered suppliers (URD) for certain categories of goods and services. This requires the registered person to pay GST on behalf of the unregistered supplier.
### **2. Threshold Limit**
For RCM to apply specifically on supplies from unregistered persons, there is a threshold limit of ₹5,000 per day. This means that if the total value of supplies from unregistered persons (URD) exceeds ₹5,000 on a particular day, then RCM is applicable on the entire amount, not just the amount exceeding ₹5,000.
### **3. Application to Your Case**
Given your situation:
- **Weaving Wages (₹10,000):** If these wages are paid to a registered person, then GST under RCM does not apply to these wages. The registered person will handle the GST according to regular rules.
- **Daily Expenses (₹4,500):** These are from URD supplies. Since the total expenses on the particular day (₹4,500) do not exceed the ₹5,000 threshold, RCM is **not** applicable on this amount.
**Important Point:** RCM applies only when the aggregate value of the supplies from unregistered persons exceeds ₹5,000 in a day. If your total expenses with unregistered suppliers are below this threshold, then you are not required to pay GST under RCM on those transactions.
### **4. Conclusion**
In your case, since the total daily expenses with unregistered suppliers (₹4,500) are below ₹5,000, you are not liable to pay GST under RCM for these expenses. Only when the total amount of URD supplies exceeds ₹5,000 on any given day will RCM become applicable.
### **Additional Points**
- **Maintain Proper Records:** Ensure to maintain proper records of transactions and verify the applicability of RCM based on the threshold limit.
- **Consult GST Practitioner:** For any uncertainties or specific scenarios, consulting a GST practitioner or tax advisor is advisable to ensure compliance with the latest GST rules and regulations.
If you need further clarification or have additional questions, feel free to ask!
### **1. RCM on Unregistered Suppliers**
Under GST, the Reverse Charge Mechanism (RCM) applies when a registered person makes purchases from unregistered suppliers (URD) for certain categories of goods and services. This requires the registered person to pay GST on behalf of the unregistered supplier.
### **2. Threshold Limit**
For RCM to apply specifically on supplies from unregistered persons, there is a threshold limit of ₹5,000 per day. This means that if the total value of supplies from unregistered persons (URD) exceeds ₹5,000 on a particular day, then RCM is applicable on the entire amount, not just the amount exceeding ₹5,000.
### **3. Application to Your Case**
Given your situation:
- **Weaving Wages (₹10,000):** If these wages are paid to a registered person, then GST under RCM does not apply to these wages. The registered person will handle the GST according to regular rules.
- **Daily Expenses (₹4,500):** These are from URD supplies. Since the total expenses on the particular day (₹4,500) do not exceed the ₹5,000 threshold, RCM is **not** applicable on this amount.
**Important Point:** RCM applies only when the aggregate value of the supplies from unregistered persons exceeds ₹5,000 in a day. If your total expenses with unregistered suppliers are below this threshold, then you are not required to pay GST under RCM on those transactions.
### **4. Conclusion**
In your case, since the total daily expenses with unregistered suppliers (₹4,500) are below ₹5,000, you are not liable to pay GST under RCM for these expenses. Only when the total amount of URD supplies exceeds ₹5,000 on any given day will RCM become applicable.
### **Additional Points**
- **Maintain Proper Records:** Ensure to maintain proper records of transactions and verify the applicability of RCM based on the threshold limit.
- **Consult GST Practitioner:** For any uncertainties or specific scenarios, consulting a GST practitioner or tax advisor is advisable to ensure compliance with the latest GST rules and regulations.
If you need further clarification or have additional questions, feel free to ask!
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