20 July 2025
Is a Composition Dealer liable to pay GST under RCM (Section 9(3) or 9(4))? Short answer: No, a Composition Dealer is generally NOT liable to pay GST under Reverse Charge Mechanism (RCM).
Explanation: Composition scheme dealers pay tax at a fixed rate on turnover and cannot collect tax from customers. As per GST law, composition dealers are not required to pay tax under reverse charge. Section 9(3) & 9(4) of the CGST Act deals with RCM on notified categories and unregistered suppliers. But this applies only to registered normal taxpayers (non-composition). What happens if a composition dealer receives services under RCM? If a composition dealer receives services on which tax is payable under reverse charge, the liability to pay tax under RCM falls on the recipient only if they are a normal registered dealer. Since composition dealers do not pay tax on outward supplies, they are not required to pay RCM.
CAclubindia
