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Gst for labour contractor

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TEJAS AGRAWAL

Article Assistant

20 Points Posted on 13 October 2024

"My client is a labour contractor registered in Maharashtra who provided labour services in Maharashtra only, but the client to whom he provided services has a GST number from *Haryana*.

In this case, is the Reverse Charge applicable under GST?"

Replies (2)

Quick Summary

This discussion clarifies GST applicability for a labour contractor based in Maharashtra providing services to a client in Haryana. Since the client is GST-registered, the Reverse Charge mechanism does not apply. Instead, the client in Haryana is liable for GST under the Forward Charge. The contractor should be aware that this constitutes an inter-state supply, potentially requiring GST registration in Maharashtra regardless of turnover.

Rama chary Rachakonda

Master in Accounts & high court Advocate

20 Points Posted on 13 October 2024

Under GST, Reverse Charge (RC) applies when a registered person receives services from an unregistered person. However, in your client's case, the service recipient (the client with a GST number from Haryana) is a registered person. Since the service recipient is registered, the liability to pay GST shifts to them under the Forward Charge mechanism. Your client, the labour contractor, will not be liable to pay GST under Reverse Charge. However, there's an important consideration: - Inter-state supply: Since the service recipient is from Haryana and your client is from Maharashtra, this is an inter-state supply. Your client may need to register for GST in Maharashtra as an inter-state supplier, even if their turnover is less than the threshold limit.