RCM
This query is : Resolved
27 July 2017
Is composition dealer liable to pay GST on Rcm sec 9 sub sec 3 or 4?
CA Altamush Zafar
(Expert)
27 July 2017
Both, depends on the transaction.
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.
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.
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