Reverse charge
This query is : Resolved
04 July 2017
If a registered person purchased goods from unregistered person, what has to paid by the recipient on such supply IGST or SGST.and how the format of invoice prepared by the unregistered person. experts gives ur views thanks in adv
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CA Rashmi Gandhi
(Expert)
05 July 2017
If outside state then IGST & within state then CGST+ SGST.
CA Rashmi Gandhi
(Expert)
05 July 2017
Tax invoice to be made on your name.
CA Rashmi Gandhi
(Expert)
05 July 2017
However exemption of 5000 per day allowed in respect of intra state supply.
05 July 2017
mam i want to know how such goods transport inter-state to the recipient by the unregistered person. the registered person has to pay tax first before purchasing
22 July 2025
Here’s a clear explanation on Reverse Charge Mechanism (RCM) when a registered person purchases goods from an unregistered person, including invoice format:
1. Tax Liability under RCM on Goods Purchased from Unregistered Supplier
When a registered person purchases goods from an unregistered person, the recipient (registered person) is liable to pay GST under Reverse Charge.
If the supply is inter-state, then IGST is payable by the recipient.
If the supply is intra-state, then CGST + SGST (or UTGST) is payable by the recipient.
Exception: For intra-state supply, exemption of ₹5,000 per day is allowed—if the value of goods purchased from an unregistered supplier is less than ₹5,000 on a single day, no reverse charge applies.
2. Invoice Format by Unregistered Supplier
An unregistered supplier is not required to issue a tax invoice, but must provide a bill of supply or any document evidencing the sale.
Since unregistered suppliers cannot charge GST, the invoice/bill will not have GST details.
The invoice should clearly mention:
Name, address of supplier (unregistered)
Name, address of recipient (registered)
Description, quantity, value of goods
A note indicating that tax is payable by recipient under Reverse Charge Mechanism (optional but recommended)
3. Invoice Format by Registered Recipient (on payment of RCM tax)
The registered recipient must issue a payment voucher or self-invoice showing the tax liability under RCM.
This invoice should include:
Supplier details (unregistered person’s name & address)
Recipient details
Description of goods purchased
Taxable value
Tax rate & amount payable under RCM (IGST or CGST+SGST)
Mention “Tax payable under Reverse Charge”
4. Payment of Tax and Compliance
Registered recipient must pay GST under RCM and declare in GST returns.
Tax paid under RCM can be claimed as Input Tax Credit (ITC) subject to regular ITC rules.
Sample note on invoice/bill from unregistered supplier:
"Supply made to a registered person and tax payable by recipient under Reverse Charge Mechanism as per GST provisions."
1. Tax Liability under RCM on Goods Purchased from Unregistered Supplier
When a registered person purchases goods from an unregistered person, the recipient (registered person) is liable to pay GST under Reverse Charge.
If the supply is inter-state, then IGST is payable by the recipient.
If the supply is intra-state, then CGST + SGST (or UTGST) is payable by the recipient.
Exception: For intra-state supply, exemption of ₹5,000 per day is allowed—if the value of goods purchased from an unregistered supplier is less than ₹5,000 on a single day, no reverse charge applies.
2. Invoice Format by Unregistered Supplier
An unregistered supplier is not required to issue a tax invoice, but must provide a bill of supply or any document evidencing the sale.
Since unregistered suppliers cannot charge GST, the invoice/bill will not have GST details.
The invoice should clearly mention:
Name, address of supplier (unregistered)
Name, address of recipient (registered)
Description, quantity, value of goods
A note indicating that tax is payable by recipient under Reverse Charge Mechanism (optional but recommended)
3. Invoice Format by Registered Recipient (on payment of RCM tax)
The registered recipient must issue a payment voucher or self-invoice showing the tax liability under RCM.
This invoice should include:
Supplier details (unregistered person’s name & address)
Recipient details
Description of goods purchased
Taxable value
Tax rate & amount payable under RCM (IGST or CGST+SGST)
Mention “Tax payable under Reverse Charge”
4. Payment of Tax and Compliance
Registered recipient must pay GST under RCM and declare in GST returns.
Tax paid under RCM can be claimed as Input Tax Credit (ITC) subject to regular ITC rules.
Sample note on invoice/bill from unregistered supplier:
"Supply made to a registered person and tax payable by recipient under Reverse Charge Mechanism as per GST provisions."
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