REVERSE CHARGE MECHANISM

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This discussion clarifies the Goods and Services Tax (GST) implications for an unregistered service provider based in Delhi. The provider, whose turnover is below the threshold, offers commission-based sales services to a registered dealer in Rajasthan. It's confirmed that commission on sales is not covered under the reverse charge mechanism (RCM). Therefore, the registered dealer in Rajasthan is not required to pay GST under RCM, and the unregistered service provider is not mandatorily required to register under GST, provided their all-India turnover remains below the threshold limit.

PARDEEP KAPIL

PARDEEP KAPIL (Querist)
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20 August 2020 SUBJECT : REGISTRATION FOR SERVICE PROVIDERS

DEAR SIRS : AN UNREGISTERED SERVICE PROVIDER ( COMMISSION ON SALES ) WHOSE TURNOVER IS LESS THAN RS.TWENTY LAKHS IS BASED IN DELHI. HE IS PROVIDING SERVICES (COMMISSION ON
SALES ) TO A GST REGISTERED DEALER IN RAJASTHAN.

COMMISSION ON SALES IS NOT COVERED UNDER REVERSE CHARGE MECHANISM.

PLEASE LET ME KNOW :

WHETHER SERVICE PROVIDER MANDATORY REQUIRED TO BE REGISTERED UNDER GST OR NOT ? IF
REGISTRATION IS NOT REQUIRED THAN HOW GST REGISTERED DEALER WILL PAY GST UNDER RCM. KIND REGARDS

Lekhraj sood

Lekhraj sood (Expert)
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20 August 2020 If all India turnover of service provider is below threshold limit and is not liable for registration under GST, then he can supply services inter-state. No RCM is applicable for the registered service recipient.

PARDEEP KAPIL

PARDEEP KAPIL (Querist)
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20 August 2020 DEAR LEKHRAJ... GOOD EVENING ! AS I MENTIONED THAT COMMISSION ON SALES IS NOT COVERED UNDER RCM THAN HOW AND WHERE GST WILL BE COUNTERED... IN OTHER WORDS, " SHOULD I UNDERSTAND THAT NO GST UNDER RCM WILL BE PAYABLE BY REGISTERED DEALER FOR UNREGISTERED DEALER"

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Lekhraj sood

Lekhraj sood (Expert)
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20 August 2020 Yes sir, on the facts presented in the query, no RCM is applicable.

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