Taxable supplies from and Payment to Unregistered suppliers

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Guest

Guest (Querist)

05 October 2017 if GSTN registered person received taxable gooda and supply from unregistered suppliers. However daily such expenses as well as payment to URD suppliers is not exceeding Rs 5000. whether receipient has to pay GST under reverse charge mechanism. Pl advise and also provide section reference

Dr. ShamsheerKhan

Dr. ShamsheerKhan (Expert)
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05 October 2017 REVERSE CHARGE U/s 9(4) EXEMPTED for Inward supply Value upto Rs.5000 in a Day – Revised The Central Government has issued Exemption Notification No. 8/2017-CT(Rate) dated 28-06-2017 giving relaxation to Registered Persons under GST from major (and draconian) compliance required under section 9(4) of the CGST Act, 2017. As per Section 9(4), every registered person (including composition dealer u/s 10) is required to pay GST on every inward supply (purchase) of goods or services from any unregistered person. The implication of this provision is that even if a registered person book expense of Rs. 10 say for tea/snaxs in his accounts, he is required to pay tax on the same under reverse charge mechanism. The entire trade & industry has been vehemently protesting against this provision because of enormous compliance burden which has the potential to stop buying goods or procuring services from unregistered persons who may be a very very small local vendor!! To overcome this difficulty, the above notification issued u/s 11(1) exempts intra-State supplies of goods or services or both received by a registered person from any supplier, who is not registered, from the whole of the Central Taxleviable thereon under sub-section (4) of section 9 of the Central Goods and Services Tax Act, 2017. The said exemption notification which shall be applicable from the date of roll out of GST i.e. from 1st July, 2017 provide exemption from payment of tax, where the aggregate value of such supplies of goods or service or both received by a registered person from any or all the suppliers, who is or are not registered, do not exceed Rs. 5,000 in a day. In simple words, if the total value of inward supply of goods or services or both in a single day from one or more unregistered persons exceed Rs. 5000, then the registered person has to pay tax on total valueunder reverse charge. It is pertinent to note that the limit is not per supplier but from all such suppliers during the day. That means, if the value of inward supply from unregistered persons in a day is say Rs. 5100, then tax is payable on total Rs. 5100 and not on the excess i.e. Rs. 100.

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RAJA P M

RAJA P M (Expert)
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05 October 2017 No need pay Tax under RCM basis for the URD related inwards is less than 5k per day. Otherwise above 5k you ll be pay Tax under RCM basis for the whole amount...

Guest

Guest (Querist)

05 October 2017 Thanks a lot expert team for giving answer with section reference

Dr. ShamsheerKhan

Dr. ShamsheerKhan (Expert)
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05 October 2017 You are welcome, Mr. Satish.

RAJA P M

RAJA P M (Expert)
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05 October 2017 You are most Welcome Dear...

CA AJAY KUMAR AGRAWAL

CA AJAY KUMAR AGRAWAL (Expert)
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05 October 2017 Plz remember that limit of 5K per day can not be availed in respect of routine expenses. You cant use it for Tea/Snack / Fooding / Rent & other regular expenses. See yourself & decide.

RAJA P M

RAJA P M (Expert)
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05 October 2017 Dear CA AJAY KUMAR AGRAWAL., please correct me if I'm wrong.... The tea/snack/fooding is under welfare expenditure. It's also under Employer and Employee relationship expenses. Then it's not under the 5k limit....