Reverse charge mechanism under gst

This query is : Resolved

Sandesh (Querist)
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16 September 2017 Dear Sir

We received car rental service from unregistered dealer from Jharkhand & they raise bill to mumbai wich RCM we have paid under IGST or CGST/SGST

Guest

Guest (Expert)

16 September 2017 Pay CGST+SGST on RCM

Guest

Guest (Expert)

16 September 2017 But as per Twitter reply when Unregister person provides inter state supply then he is liable to pay and not the recipient.

Sandesh

Sandesh (Querist)
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16 September 2017 Please send me any notication........if have sir.....

Guest

Guest (Expert)

16 September 2017 There is no notification but reply is available on Twitter but on safaer side pay tax

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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22 July 2025 Let's clarify your question about Reverse Charge Mechanism (RCM) under GST on receiving car rental service from an unregistered dealer in another state (Jharkhand to Mumbai):

Scenario:
Your company in Mumbai (Maharashtra) received car rental service from an unregistered supplier in Jharkhand.

Supplier raised the bill from Jharkhand (out-of-state).

You want to know:

Under RCM, should you pay IGST or CGST + SGST?

Is there a notification clarifying who is liable to pay tax?

Important Points:
1. Interstate supply by unregistered person
Under GST, only registered suppliers can issue tax invoices and collect tax.

An unregistered supplier cannot charge GST on the invoice.

When a registered recipient receives service from an unregistered supplier, the recipient has to pay GST under reverse charge.

2. Which tax to pay under RCM: IGST or CGST+SGST?
Since your supplier is in Jharkhand and you are in Maharashtra, the supply is interstate.

Interstate supplies attract IGST.

So, under RCM, you have to pay IGST on the value of service.

Relevant provisions:
Section 9(4) of CGST Act, 2017 (applies to services supplied by an unregistered person to a registered person) states that the recipient shall pay tax under reverse charge.

IGST Act applies on interstate supplies.

Therefore, when a registered person in Maharashtra receives services from an unregistered person in Jharkhand, the recipient pays IGST under reverse charge.

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